NU Online News Service, Dec. 27, 10:45 a.m. — Washington
Congress has kicked off official debate over federal chartering of insurance companies.
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 powers of the commissioner would cover both life and property-casualty insurance.
The commissioner would have the authority 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.
The legislation would create a backup federal guaranty association to cover “non-qualifying” states.
Regarding agents, the legislation creates national insurance agencies that would be federally licensed. An insurance agent would have to obtain a federal license in order to sell insurance for a federally chartered insurer.