NU Online News Service, Jan. 17, 4:55 p.m. – Proposals to promote “optional” federal insurance regulation and support state insurance regulation may dominate discussion at the upcoming National Association of Insurance Commissioners annual conference.
The conference is scheduled for Feb. 7-9 in San Antonio.
One hot topic is sure to be the National Insurance Chartering and Supervision Act, a bill recently introduced by Sen. Charles Schumer, D-N.Y.
The bill would establish a new bureau within the U.S. Treasury Department, the Office of the National Insurance Commissioner.
“ONIC” might resemble the Office of Thrift Supervision, which charters and supervises federal thrifts, and the Office of the Comptroller of the Currency, which charters and supervises national banks.
A national insurance commissioner would head the new agency.
Schumer says the bill would give insurance companies and agencies the freedom to choose between state and national charters, just as banks have the freedom to choose between state and national charters.
But Mike Pickens, NAIC vice president and Arkansas insurance commissioner, says he personally opposes the federal chartering legislation.
Pickens charges that the Schumer bill was written by the banking industry, and that obtaining a federal charter would be all but mandatory for agents.
Practically speaking, an agency would need to obtain a federal charter to sell policies offered by a national insurer, Pickens says.
He says many state legislators oppose optional federal chartering because it could cut state revenue from premium taxes. Arkansas alone would lose $80 million a year, Pickens estimates.
State insurance regulation has made great progress in the last year, and Pickens says regulators will be talking about ways to make further progress.
Programs under review will include two major speed-to-market projects, the Improvements to State-based Systems project and the Coordinated Advertising Rate and Form Review Authority project.
Regulators will also discuss certification of state department compliance with the National Association of Registered Agents and Brokers provision of the Gramm-Leach-Bliley Act Financial Services Modernization Act.
GLB requires at least 29 states to eliminate regulatory barriers to entry by out-of-state agents. If too few states adopt uniform or reciprocal agent licensing rules, then GLB will force the federal government to set up NARAB, a national agent licensing body, in November.
To date, 39 states have passed legislation or adopted regulations that appear to satisfy the act, and five states are considering the Producer Licensing Model Act, according to the NAIC.
Thirty-two states and the District of Columbia have signed reciprocity agreements, the NAIC says.