State Insurance Regulation Preservation Act

Floor Speech

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I rise in support of H.R. 5059, the State Insurance Regulation Preservation Act. H.R. 5059 is a bipartisan piece of legislation that seeks to ensure that Federal regulation over the insurance industry is not unnecessarily duplicative or overly burdensome.

Mr. Speaker, I would like to start by thanking my colleague from the other side of the aisle, Mr. Rothfus, for working on this bill with me, as well as the chairman of our committee, Congressman Hensarling, and Ranking Member Waters for understanding the issue we are trying to solve and lending their support.

This bill came a long way from when it was introduced earlier this year, and it reflects input from members of the Financial Services Committee, industry stakeholders, and Federal regulators. This bill simply seeks to right-size regulation placed on insurance savings and loan holding companies compared to the risk they pose to financial stability.

Insurance savings and loan holding companies are insurance companies that own their own bank. In most instances, these types of banks represent a small percentage of their insurance parent company's overall bottom line, but due to the ownership by the company, they are subject to Federal regulation by the Federal Reserve and the Office of the Comptroller of the Currency.

When we held a legislative hearing on this bill in March, one of the witnesses testified that, while their insurance company's bank assets made up only 0.2 percent of the company's total assets, the regulation by the Federal Reserve consumed 25 percent of the company's compliance costs, ultimately forcing the company to close their bank.

This is but one example, Mr. Speaker, of the uneven regulation these companies are facing. This costly and out-of-sync duplicative regulation of these insurance savings and loan holding companies is not working as effectively as it should, and this bill seeks to harmonize some of these duplications.

There is no reason why a smaller insurance company, like Ohio-based Westfield Insurance, should face more regulation than some of the largest insurance companies in the country due to the fact that they simply own a small bank, or why a company like Nationwide Insurance, a company based in my district, the Third Congressional District of Ohio, which has $236 billion in assets and a $7 billion bank, should be treated by the Federal Reserve like a $243 billion bank holding company.

This is not fair. The regulation of the business of insurance is different from the regulation of banks, and the Federal Reserve's supervisory framework must reflect, I believe, this important difference.

The Federal Reserve has historically never regulated insurance until recently, within the past 10 years, Mr. Speaker, when Congress transferred the regulatory authority over these companies to the Feds. By contrast, our State insurance regulators have regulated this country's insurance system for nearly 150 years.

While the Federal Reserve has said that they are looking to tailor some of their regulations, there is little evidence to support those assertions, and time is simply running out. Since we transferred this authority to the Federal Reserve in 2010, nearly two-thirds of existing insurance savings and loan holding companies have closed their banks.

We need better coordination and cooperation between our State insurance regulators and Federal regulators to ensure our insurance regulatory regime is not unnecessarily duplicative or overly burdensome.

This bill will seek to accomplish both of these things. Talk about a win-win, Mr. Speaker. I believe this is it.

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Mrs. BEATTY. Mr. Speaker, in closing, I would simply like to say, again, thank you to my colleagues on the other side of the aisle, and I want to thank all the members who helped us get this bill to this point and reiterate that this bill does not--does not--remove insurance savings and loan companies from Federal regulation.

Insurance savings and loan holding companies will still be regulated by several Federal Government agencies, including the Federal Reserve. This bill simply seeks to require the Federal Reserve to tailor their bank-centric regulations to the business of insurance and to coordinate supervision and examination of these companies with their State counterparts to avoid unnecessary, duplicative, and overly burdensome regulation.

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