Insurance companies, unlike banks and securities firms, have been chartered and regulated solely by the states for the past 150 years. Another state reform largely implemented in the late 1980s and early 1990s was the introduction of state insurance guaranty funds. The Gramm-Leach-Bliley Act

The 1999 Gramm-Leach-Bliley Act (GLBA) significantly overhauled the general financial regulatory system in the United States. Some insurance companies believe that in the post-GLBA environment, state regulation places them at a competitive disadvantage in the marketplace. They maintain that their non-insurer competitors in certain lines of products have federally based systems of regulation that are more efficient, while insurers remain subject to perceived inefficiencies of state insurance regulation, such as the regulation of rates and forms as well as other delays in getting their products to market. Many industry participants, particularly life insurers, larger property/casualty insurers, and larger insurance brokers, began supporting broad regulatory change for insurance in the form of an optional federal charter for insurance patterned after the dual chartering system for banks. GLBA also addressed the issue of modernizing state laws dealing with the licensing of insurance agents and brokers and made provision for a federally backed licensing association, the National Association of Registered Agents and Brokers (NARAB), which would have come into existence three years after the date of enactment if at least 29 states failed to enact the necessary legislation for state uniformity or reciprocity. In the same time frame, a number of narrower bills affecting different facets of insurance regulation and regulatory requirements were also introduced in Congress, including bills addressing surplus lines and reinsurance, insurance producer licensing, and expansion of the Liability Risk Retention Act beyond liability insurance. This crisis overlaid a range of new issues and arguments to the previously existing debate on insurance regulatory reforms. The second failure in the insurance industry was that of a specific company, American International Group. The 111 th Congress responded to the financial crisis with the Dodd-Frank Wall Street Reform and Consumer Protection Act, which enacted broad financial regulatory reform. The Dodd-Frank Act provisions that most directly addressed insurance and are of ongoing concern were (1) creation of a Federal Insurance Office (FIO); (2) systemic-risk provisions, such as the creation of a Financial Stability Oversight Council (FSOC) with the authority to oversee systemically important insurers; and (3) previously introduced provisions harmonizing the tax and regulatory treatment of surplus lines insurance and reinsurance (the Nonadmitted and Reinsurance Reform Act). Issues in the 112th Congress

Insurance issues before the 112 th Congress include
Oversight and implementation of the Dodd-Frank Act; Legislation that would narrowly reform the current regulatory system, such as H.R. 2126 that would extend the Liability Risk Retention Act; and Response to international developments, such as the changes to the European Union's regulatory scheme known as Solvency II. The Insurance Consumer Protection and Solvency Act (H.R. 6423)

H.R. To take effect, however, these changes must be made to state law and regulation by the individual state legislatures and insurance regulators. State Regulatory Modernization Efforts

Following the passage of GLBA, state insurance regulators working through the NAIC embarked on a regulatory modernization program. Although the financial crisis had begun at that time, the Treasury blueprint was not primarily a response to the crisis, but instead an attempt to create "a more flexible, efficient and effective regulatory framework." Systemic risk regulation as proposed in the legislation would have been the primary responsibility of the Federal Reserve in conjunction with a new Financial Services Oversight Council made up of the heads of most of the federal financial regulators. This legislation included the following:
The Insurance Industry Competition Act of 2009 ( H.R.
The individual states have been acknowledged as the primary regulators of insurance since 1868. Following the 1945 McCarran-Ferguson Act, this system has operated with the explicit blessing of Congress, but has also been subject to periodic scrutiny and suggestions that the time may have come for Congress to reclaim the regulatory authority that it granted to the states. In the late 1980s and early 1990s, congressional scrutiny was largely driven by the increasing complexities of the insurance business and concern over whether the states were up to the task of ensuring consumer protections, particularly insurer solvency.
Immediately prior to the recent financial crisis, congressional attention to insurance regulation focused on the inefficiencies in the state regulatory system. A major catalyst was the aftermath of the Gramm-Leach-Bliley Act of 1999 (GLBA), which overhauled the regulatory structure for banks and securities firms, but left the insurance sector largely untouched. Many larger insurers, and their trade associations, had previously defended state regulation but considered themselves at a competitive disadvantage in the post-GLBA regulatory structure. Some advocated for an optional federal charter similar to that available to banks. Various pieces of insurance regulatory reform legislation have been introduced, including bills establishing a broad federal charter for insurance as well as narrower, more targeted bills.
The states, particularly working through the National Association of Insurance Commissioners (NAIC), were not idle following congressional attention. They reacted quickly to GLBA requirements that related to insurance agent licensing and have since embarked on a wider-ranging project to modernize insurance regulation. This has included both regulatory aspects, such as streamlining the process for rate and form filing, and more basic legal aspects, such as the creation of an interstate compact to provide uniformity across states for some life insurance products. Because enactment by the state legislature is necessary before the legal changes suggested by the NAIC can take effect in that state, the process typically does not move rapidly.
The recent financial crisis refocused the debate surrounding insurance regulatory reform. Unlike in many financial crises in the past, insurers played a large role in this crisis. In particular, the failure of the large insurer American International Group (AIG) spotlighted sources of risk that had gone unrecognized. The need for a risk regulator for the entire financial system was a common thread in many of the recent financial regulatory reform proposals. The Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203), enacted following the crisis, gave enhanced systemic risk regulatory authority to the Federal Reserve and to a new Financial Services Oversight Council (FSOC), including some oversight authority over insurers. The Dodd-Frank Act also included measures affecting the states' oversight of surplus lines insurance and reinsurance and the creation of a new Federal Insurance Office (FIO) within the Treasury Department.
The 112th Congress faces both relatively new issues arising from the Dodd-Frank Act (addressed in H.R. 3559 and H.R. 6423) and issues that predate the financial crisis, such as the licensing of insurance agents and brokers (addressed in H.R. 1112) and the expansion of the federal Liability Risk Retention Act (addressed in H.R. 2126). In addition, various international issues may be of concern to Congress, such as the European Union's Solvency II project to overhaul the European insurance regulatory system.