North Dakota lawmakers have approved a bill that would transfer the responsibilities of the North Dakota Securities Department to the state's Insurance Department, shifting it from a cabinet-level agency to one reporting directly to the insurance commissioner.
The bill passed the state Senate on April 11 following House amendments, after initially clearing the Senate on April 1. If signed into law by Republican Gov. Kelly Armstrong, the change would take effect July 1.
The proposed consolidation would place oversight of securities regulation under Insurance Commissioner Jon Godfread (pictured above). The commissioner has expressed support for the bill, stating the merger would align regulatory functions that already have overlapping touchpoints.
Godfread said the move is intended to create efficiencies for both industry professionals and consumers and noted that many insurance professionals regularly engage with both departments. He also said this is an initial step in examining how best to integrate the agencies' existing responsibilities.
In a report from AM Best, Godfread said that consolidating the departments, as has been done in 16 other states, could simplify regulatory processes for financial service firms and centralize consumer protection efforts.
In the US, securities regulation is primarily managed at the state level, with each state establishing its own regulatory framework. The structure and oversight of securities regulation vary across states, with some integrating securities oversight within their insurance departments, while others maintain separate agencies.
Certain states have consolidated regulatory functions, overseeing both insurance and securities within a single department. For example, the District of Columbia's Department of Insurance, Securities, and Banking manages both insurance and securities regulation.
In contrast, many states maintain distinct agencies for securities and insurance regulation. For instance, New York has the Department of Financial Services overseeing insurance, while the Attorney General's Investor Protection Bureau handles securities regulation.
Supporters of the North Dakota bill have described the measure to improve government operations, strengthen fraud detection, and unify enforcement of financial crimes. They argue that the merger would allow for a more coordinated approach across related regulatory areas.
Opponents, however, questioned the need for the change. Sen. Jerry Klein, a Republican representing District 14, voted against the bill.
Klein raised concerns about whether the current agency structure had proven problematic and said testimony suggested the merger would not generate financial savings while potentially reducing efficiencies.
Elsewhere in the state, North Dakota lawmakers are also advancing legislation aimed at modernizing the state’s oversight of insurance producers.
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