Insurance reform

Regulation of the insurance industry has been the purview of the states since 1868, according to the Congressional Research Service (CRS) in a recent paper. CRS traces the history of this jurisdiction to the present, with increasing Congressional interest in insurance oversight in the current financial crisis, particularly with the failure of American International Group (AIG).

A major catalyst for congressional interest has been the aftermath of the Gramm-Leach-Bliley Act of 1999 (GLBA), which modernized the regulatory structure for banks and securities firms, but left the insurance sector largely untouched. Many larger insurers, and their trade associations, had previously defended state regulation but consider themselves at a competitive disadvantage in the current regulatory structure. They are now largely arguing for an optional federal charter akin to that available to banks.

CRS summarizes several bills introduced in the current Congress addressing this issue.

Insurance Regulation: Issues, Background, and Legislation in the 111th Congress, R40771 (pdf, 16pp/192kB), from Open CRS, Aug. 19, 2009