Optional Federal Charter Bill
Introduced In The Senate
The Congressional debate over federal chartering of insurance companies has begun.
Sen. Charles Schumer, D-N.Y., introduced legislation establishing optional federal chartering of insurers just before Congress recessed for the year.
The Schumer legislation appears to be a hybrid based on proposals developed by the American Council of Life Insurers and the American Bankers Insurance Association, both of Washington.
It would establish an Office of the National Insurance Commissioner within the Treasury Department.
The commissioners powers would cover both life and property-casualty insurance.
The commissioner would be empowered to establish capital and reserve standards, accounting standards and other requirements.
In addition, the commissioner would enforce specified market conduct standards and establish standards for insurance policies.
There would be no direct federal government obligation in the event of an insurance company insolvency.
Rather, insurers would be required to participate in “qualified” state insurance guaranty associations, which are those that meet standards identified in the legislation.