House wants Senate to accept stronger protections for insurance regulations

House Democrats want the Senate to accept stronger protections for state insurance regulations under the Wall Street overhaul bill.

The 2,000-page regulatory bill, now in a conference between House and Senate lawmakers, sets up a new federal office in the Treasury Department to monitor the industry and have a say on international insurance matters. 

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The Senate bill, which is the basis for the negotiations, provides broader powers than the bill approved by the House for the federal office to negotiate international insurance matters and override state rules.

House Democrats on Tuesday will seek to change the bill so it provides stronger judicial review procedures and a narrower scope of the type of international agreements that can be pre-empted. House Financial Services Committee Chairman Barney Frank (D-Mass.) asked Rep. Jackie Speier (D-Calif.) to speak on Tuesday on behalf of the House version.

House and Senate lawmakers are looking to reconcile differences between the bills before the July 4 recess. Few senators have publicly voiced their positions on the insurance issue, which has received little attention during the regulatory debate. It is unclear if senators are willing to sign off on the House changes.

Sen. Jeff Merkley (D-Ore.), joined by a handful of senators, wanted to change the Senate bill before it passed in May to make it similar to the House’s version, but their amendment never came up for debate. Sen. Patrick Leahy (D-Vt.), a co-sponsor of that effort, is one of the conferees and is supporting tweaks to the bill. 

“He would be supportive of further efforts to limit federal pre-emption,” said David Carle, Leahy’s spokesman. “He’s long supported states’ ability to enact consumer protections that exceed federal standards.”

The issue has split the insurance industry along traditional lines. 

Insurers that support a strong federal voice on the industry argue the Senate version would give the U.S. needed power to oversee an increasingly global industry. Nine large insurance trade associations — including the American Insurance Association, American Council of Life Insurers and Reinsurance Association of America — wrote to lawmakers last week to support the Senate language.

Other large insurers favor the existing state-based system of regulations and support the House’s version. They are joined by consumer advocacy groups including Consumer Watchdog, U.S. Public Interest Research Group and Public Citizen.

“These provisions would newly empower Treasury to weaken existing state insurance regulation in the name of expanding access for foreign insurance firms to the U.S. market,” the consumer groups wrote last week of the Senate bill.