China to Join WTO on Dec. 11. (Political Insight).

House bill would give SEC more control in national emergencies; legislation would link anti-fraud databases; Senate considers equal coverage for mental health care.

China's entry into the World Trade Organization comes at a turbulent time for the world's insurance markets, but insurers are moving ahead with high hopes, industry representatives said.

One benefit of the timing is that China is opening its insurance market with a fresh appreciation for the value of diverse sources of reinsurance, instead of forcing all insurers to cede a portion of their business to the state-run reinsurer, said John Savercool, vice president of federal affairs for the American Insurance Association. Among the concessions extracted from China in the final months of negotiations was a phase-out of the mandatory 20% cession to China Reinsurance Co. over several years.

The Sept. 11 attacks on the United States showed the "great value and necessity for primary insurers to stay in business by spreading the risk far and deep," Savercool said.

China is set to become a full member of the WTO on Dec. 11 after its parliament ratified the agreement adopted at the WTO's Ministerial Conference in Doha, Qatar, on Nov. 10.

Savercool said that despite the attention being given to the Sept. 11 events, industry leaders don't want to lose sight of "how significant China's WTO accession is." It will allow insurers to "begin a structured process" toward getting licenses, Savercool said.

Negotiators had to work through a series of thorny issues regarding access to the insurance market, including the size of foreign ownership stakes permitted in Chinese insurers; the rights of foreign insurers already operating in China; which cities would be opened to outsiders, and what time line the market opening would follow.

The WTO Ministerial also approved Taiwan's membership in the WTO at the Doha meeting.

House Expands SEC Emergency Powers

The U.S. House has approved a bill to expand the emergency powers of the U.S. Securities and Exchange Commission and give it more flexibility to respond to situations such as the terrorist attacks of Sept. 11.

The bill, now headed for the Senate, would allow the commission to extend emergency orders for as long as 30 business days, and in some cases for as many as 90 calendar days. Currently, SEC emergency orders are limited to 10 business days. It would also widen the commission's scope for emergency relief to include all federal securities laws. The SEC's ability to grant emergency relief now is limited to just one of the several federal securities laws.

U.S. securities trading stopped for several days after the attacks, and when it resumed Sept. 17, the SEC for the first time used emergency powers to allow companies to repurchase their stock without having to meet volume and timing restrictions that normally would apply.

SEC Chairman Harvey L. Pitt has said he saw an "upsurge" in the amount of repurchasing.

Bill Establishing Anti-Fraud Network Passes House

The U.S. House approved a bill that would create an anti-fraud network for sharing information among financial regulators, including state insurance regulators.

Under H.R. 1408, the Financial Services Antifraud Network Act, a network would be established without any new collection of information and without the creation of any new databases. No consumer information would be shared--only information related to fraudulent activity, which would be shared only among financial regulators, according to the House Financial Services Committee.

The legislation would link existing anti-fraud records and the more than 250 financial-services regulators in the United States. The bill is now headed for the Senate.

Insurance regulators were interested in the bill, because it would give them access to FBI criminal data for the first time.

Senate OKs Provision for Mental Health Spending Parity

The U.S. Senate has added a provision to a labor, health and education spending plan that would require mental illness to be covered the same as any other illness in group health plans.

The amendment to the $396 billion Labor, Health and Human Services and Education appropriation does not mandate coverage of health benefits but applies to group health plans already providing mental health benefits and is modeled after the mental health benefits provided through the Federal Employees Health Benefits Program.

Sens. Pete Domenici, R-N.M., and Paul Wellstone, D-Minn., introduced the amendment, which was originally a bill the two had sponsored--the Mental Health Equitable Treatment Act (S.543).

The amendment would ensure full parity in the coverage of mental health benefits by prohibiting a group health plan from treating mental health benefits differently from the coverage of medical and surgical benefits. It is modeled after and expands the Mental Health Parity Act of 1996, which Domenici and Wellstone also authored.

Like the 1996 law, the amendment does not require a health plan to provide coverage for alcohol and substance abuse benefits, and it contains an exemption for companies with 50 or fewer employees.