Financial Services Reform

For the most part, the insurance industry escaped the glare of the financial services reform proposal rolled out in Congress recently by Senator Dodd (who is not running for re-election). However, the proposal does recommend the creation of an office of national insurance within the Treasury Department to monitor the insurance industry and assess ways to modernize insurance regulation. Specifically, the proposed national insurance office would evaluate the merits of providing insurers with the option for federal charters, and thus federal regulation. It is hard to imagine a Congressionally-created, federal office of anything concluding that state regulation is a more favorable framework, but my instincts and my sense of history tell me that this is another small step in the slow drift toward a dual regulatory system similar to the one that oversees the banking industry. We can only hope that a federal system of insurance regulation would be more diligent and well-informed than the regulatory framework that was charged with keeping the activities of our banking giants under control.