Wisconsin Insurance Commissioner Sean Dilweg has sent a letter to Congress expressing opposition to the Insurance Information Act of 2008 (H.R. 5840). In it, he says the bill grants the U.S. Treasury Secretary new powers to substitute his views of insurance regulation for the laws and policies of the states, and do so in an unaccountable manner.

Here are highlights from Commissioner Dilweg’s letter:

“I am writing to express opposition to the proposed Office of Insurance Information Act (“OII Act”) in its current form. This proposal, as currently drafted, may have the unintended effect of creating an unaccountable federal process that produces deregulation of the insurance industry to the detriment of consumers. I am also concerned that some supporters of this legislation view it as the forerunner of enactment of a federal insurance regulation scheme that will sweep aside state insurance consumer protection regulations that they oppose.”

“The proposed bill empowers the U.S. Treasury to engage in unaccountable policymaking to preempt longstanding insurance regulatory standards. Those insurance regulatory standards are authorized by Congress under the McCarran-Ferguson Act, established by state legislatures that are accountable to their constitutiencies, and administered and developed through publicly accountable processes involving insurance regulatory agencies.”

“The bill has the undesirable effect of empowering the U.S. Treasury with a unique preemption mechanism that allows federal policy statements arrived at without open debate to be substituted for insurance regulatory standards. This preemptive authority is not subject to oversight by Congress, does not include a meaningful say by state insurance policymakers, either executive or legislative, and is not subject to meaningful judicial review.”

Letter by Wisconsin Insurance Commissioner Dilweg to Congress (8/13/08)

What It Means to Agents:  Commissioner Dilweg’s observations regarding deficiencies in the proposed OII Act are correct. He accurately lays out the dangers of the preemption regime it creates, especially the fact that it lacks any oversight by Congress or the states and that any meaningful judicial review would be trumped by court deference to federal action. The example he cites explains in detail how this would undercut the McCarran-Ferguson Act. But the most important objection to OII that Commissioner Dilweg raises is its potential to harm consumers. After all, truly protecting insurance consumers is in everyone’s interest.

August 19, 2008