The U.S. Treasury Department will not propose a new regulatory framework for the insurance industry when it outlines sweeping new rules for the financial services sector, sources familiar with the plans said on Tuesday.
Rep. Barney Frank, chairman of the House Financial Services Committee, said on Tuesday that the Treasury Department is not ready to weigh in on the key question of an 'optional federal charter' for insurers, said industry sources who heard him speak.
Speaking at a fundraiser hosted by the American Council of Life Insurers, Frank said that his committee would begin to debate key insurance questions around September, said the industry sources.
When the Treasury Department outlines its regulatory reform plans on Wednesday it is expected to fault the fragmented nature of insurance regulation. It may propose forming a federal clearinghouse to gather information about the sector.
The nation's 6,000 insurers are presently regulated by state and territorial governments. Congress and international industry groups have complained in the past about the absence of a central source for insurance market information.
Legislation has been introduced in Congress in recent years, but not approved, to create a federal insurance information office to provide advice and expertise to the administration and Congress and track industry developments.
At present, the insurance industry is regulated at the state level and many large insurance companies would prefer to answer to a single, federal overseer.
Many Democrats and Republicans have expressed general support for such a plan.
Only ostriches can now deny the need for establishing a federal insurance resource center and a basic federal insurance regulatory structure, Rep. Paul Kanjorski said at a Tuesday hearing to discuss reform of the insurance industry.
Kanjorski, chairman of the House Financial Services panel on insurance, has introduced legislation that would create a federal insurance clearinghouse that could become a precursor to a federal charter.
(Reporting by Patrick Rucker and Kevin Drawbaugh; Editing by Andrea Ricci)