As expected, the American Council of Life Insurers decided to formally pursue optional federal chartering of life insurance companies.
The board voted to formally endorse optional federal chartering at its annual meeting in Boston, after more than a year of study.
ACLI, based in Washington, has termed regulatory reform a “survival issue” for life insurers.
“Regulatory reform and modernization is crucial to the continued success and competitiveness of life insurers,” says Joe Gasper, president and COO of Nationwide Financial Services, Inc., Columbus, Ohio.
“In todays rapidly evolving financial services marketplace, life insurers no longer compete only with one another,” Gasper says, “but with banks and securities firms as well.”
Gasper says that banks and securities firms, due to more streamlined and centralized regulatory systems, can bring products to the national marketplace usually within 30 to 90 days.
This contrasts the six to 18 months for life insurers, he says.
“Failure to reform insurance regulation would pose a competitive burden that may threaten the viability of the life insurance industry,” Gasper says.
Gasper is ACLIs incoming board chairman.
ACLI adds that it will continue to devote all resources necessary to achieve regulatory reform at the state level.
David Winston, vice president of government affairs for the National Association of Insurance and Financial Advisors, Falls Church, Va., says that NAIFA agrees with ACLIs efforts to reform state regulation.
However, he says, NAIFAs policy does not allow it to support optional federal chartering.
Rather, Winston says, NAIFA is exploring ways to achieve national treatment of insurance companies and agents, which might involve federal legislation.
This could include federal minimum standards or an approach such as the National Association of Registered Agents and Brokers, he says.
(NARAB was part of the Gramm-Leach-Bliley Act and called for creation of a federal clearinghouse to streamline agent and broker licensing unless a sufficient number of states enact licensing reciprocity laws.)
Winston says that NAIFA does not necessarily support these ideas. Rather, he says, NAIFA is simply exploring them as a way to provide incentives for states to achieve uniformity and efficiency in insurance regulation.