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June 28, 2001 at 08:00 PM
Getting More Efficient Regulation Now A ‘Survival Issue’ For ACLI
By
Washington
Improving the efficiency of life insurance regulation is now viewed as a “survival issue” by life insurers, says a representative of the American Council of Life Insurers.
William B. Fisher, vice president with MassMutual, says non-insurance financial institutions such as banks and mutual funds compete directly with life insurers.
Moreover, he says in testimony before a House of Representatives panel, these firms enjoy regulatory efficiencies that translate into significant marketplace advantages.
The hearing by a House Financial Services Subcommittee focused on the issue of “speed to market” in the current regulatory environment.
The subcommittee is also expected to examine optional federal chartering of insurers and agents in the next few months. This comes on the heels of a hearing on agent licensing just a few weeks ago.
While Congress is not expected to seriously consider federal legislation on insurance regulation for at least two years, these hearings could lay the groundwork for a future effort to create a larger federal role in regulating insurance.
Fisher says the inability of life insurers to bring new products to market in a timely and efficient manner is one of the most serious shortcomings of the current system.
“In the age of the Internet, when consumers expect to be able to consider many sophisticated financial products rapidly, the insurance industry will be left behind by its major competitors as a result of its current regulatory environment,” he says.
Fisher says it can take anywhere from six months to two years to gain approval to sell life insurance products on a nationwide basis.
By contrast, he says, it takes banks only a matter of weeks, and securities firms only three or four months, to obtain approval from their respective regulators.
“We preliminarily estimate that last year alone, we lost at least $50 million in sales, measured by premium, due to the inability to get products to market more quickly,” Fisher says.
He notes that the National Association of Insurance Commissioners, Kansas City, Mo., has launched a pilot project aimed at accelerating the approval process for policy forms, called the Coordinated Advertising, Rate and Form Review Authority (CARFRA).
While this is a good “first step,” he says, there are practical problems.
For one thing, Fisher says, the 10 states participating in CARFRA do not have uniform laws. Companies, he says, must alter their product filings based on the different “deviations.”
