|MARY WILLIAMS WALSH|
The United States Treasury called on Thursday for a greater federal role in the regulation of insurance, particularly in areas like mortgage insurance, the collection and use of personal data to set prices, and the use of secretive entities known as captives to keep risks off the books of insurers.
But the Treasury's wide-ranging report on how to strengthen regulation still leaves broad areas of the
The report, which was ordered by the Dodd-Frank financial overhaul law, said it was time to stop debating which level of government should be in charge and instead build a hybrid model that would give duties to both.
Treasury's findings have been awaited warily by the states, which collect substantial taxes from insurers and do not want to give up their jurisdiction over them. The insurers themselves have mixed views on state versus federal regulation.
The report said that the groundwork for a hybrid model had already been laid in recent years as the federal government became more active in programs for insuring against crop failures, flooding and terrorism. It said state and federal officials should build on that foundation, and recommended places to begin.
In the report,
Some of the recommended changes would have to be enacted by
Members of the association already have extensive rules in the areas cited in the report. In recent years, however, a growing number of states have been taking advantage of the complexity and lack of uniformity in those rules to attract business investments and create jobs.
When a life insurer thinks its own state regulators require it to tie up too much capital in ''redundant reserves,'' for example, it can go to a state that allows questionable reinsurance deals that supposedly make the reserves unnecessary. States offer near-total secrecy for such arrangements.
In the past, insurers usually had to go to offshore havens like
Some state regulators, particularly
The report said there was a need for single, uniform requirements for reinsurance and said the Treasury would begin to develop them, working with
The states have long argued that they are closer to ordinary consumers, can field complaints and so can provide the best protection. In the report,
The report also said that states needed to develop a uniform approach to settling and netting out derivatives contracts, because the current rules in some states do not match those of federal or foreign bankruptcy laws. If the discrepancies were not corrected, the report said, they could promote the systemic risk that the federal rules were intended to reduce.
A Treasury official noted that in the areas where the federal government expected to expand, like mortgage insurance, the states could continue to license individual companies and collect taxes from them.
This is a more complete version of the story than the one that appeared in print.
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|Source:||New York Times Digital|