New York Agent Group Opposes Dual Charter Proposals
To The Editor:
The Independent Insurance Agents Association of New York strongly opposes recent proposals to create a dual charter system for insurers, as advanced by the American Insurance Association, the American Bankers Association Insurance Association, and the American Council of Life Insurers.
IIAANY supports the longstanding state regulatory system that protects consumers and oversees insurer solvency and agent/broker activity.
Proposals calling for an optional federal charter system do not take into account the consumers interest. There is no clamoring for changes in the current state-based system from any consumer quarter. In fact, the direct loss of state controls over insurer solvency, licensing and anti-fraud efforts may very well affect consumers adversely.
Importantly, the proposed dual system would result in the “disenfranchisement” of the consumer to the extent that policyholders now have a direct voice with state legislators over insurance problems.
Further, insensitivity toward individual states insurance needs and underwriting environments is inherent in a federal system of regulation. Each state is different, each has unique underwriting variables. Local regulation is responsive to those particular factors.
Under a dual-charter system, we may surely expect a loss of jobs and tax revenues, as insurers close local offices and consolidate their operations. This is bad for New York and for all states where insurers have significant economic impact.
The proposed optional federal charter system would force independent insurance agents to obtain two licenses (one administered by the state and another by the federal government) to accommodate the different charters.
Additionally, a dual-charter system would create an uneven playing field for insurance companies in the event the national approach provides different methods of rating and form regulation, as well as differing procedures within which a national guarantee fund would operate.
A far better approach to the market problems that dual-charter advocates seek to remedy would be a state-based system that results in common standards for company licensing, agent/broker licensing and education.