Committee recommends merging Securities Department into Insurance Department, citing consumer protection concerns

The House Industry, Business and Labor Committee voted to send Senate Bill 2214 forward with a do‑pass recommendation to consolidate the state Securities Department into the Insurance Department, a change supporters say will strengthen enforcement, improve regulatory capacity and give the state greater ability to protect investors.

Senator Dale Patton introduced the bill, and Insurance Commissioner John Godfrey testified at length that the merger is intended to address what he described as "operational inefficiencies" and resource gaps that have hampered securities oversight. Godfrey said the Insurance Department’s existing legal, investigative and licensing infrastructure could be used to provide redundancy and quicker enforcement.

Godfrey cited other states that have combined the functions — including South Dakota — and argued the merger would improve the state’s ability to pursue fraud investigations and better coordinate oversight of products that span insurance and securities, such as annuities. "This transition is long overdue," he told the committee, describing unimplemented items and enforcement gaps that, he said, had led to harm for North Dakota consumers.

Tim Karski, who had been appointed securities commissioner in December, testified he has prioritized investigations and criminal referrals and said the department is working active cases. Karski told the committee he has filled some vacancies and planned to fill the department’s attorney position, and that better resourcing would support prosecutions and consumer education.

Representative Ruby moved a do‑pass recommendation; Representative Koppelman seconded. The committee approved the motion by roll call and added that the bill should be referred to appropriations for budget review of the merger’s staffing and operating needs.

Committee discussion included questions about preserving technical expertise for securities regulation, the possibility of creating an elected securities office, and whether integration would dilute subject expertise. Godfrey and Karski said the insurance department would create a securities division with a dedicated deputy and legal staff, and that the current 10 securities FTEs would be retained initially.

The committee’s action advances the bill for further consideration; the appropriations referral will allow members to review staffing and funding implications before floor action.