Commissioners Set To Discuss States’ Progress, Federal Options
When state insurance commissioners gather for their annual conference in San Antonio from Feb. 7-9, the issues of a federal charter option and what states are doing this year to demonstrate local regulatory effectiveness will be the focal points of discussion, says Mike Pickens, vice president of the National Association of Insurance Commissioners.
Pickens, who is also Arkansas commissioner, says the National Insurance Chartering and Supervision Act legislation introduced by Sen. Charles Schumer, D-N.Y., will be discussed as part of the federal charter issue.
The bill establishes a new bureau in the Treasury Department to be known as the Office of the National Insurance Commissioner. It is patterned after 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 also be chosen to head the new agency.
Pickens says that, in general, he opposes federal chartering legislation. For one thing, the bill is written by the banking industry, he states.
He also noted in a recent speech the implication for agents. Practically speaking, Pickens said, the charter’s provisions would not be optional for agents since an agency would need to obtain a federal charter to sell policies offered by a national insurer.
Noting the progress state insurance regulation has made in the last year, he says, “It is a question of the necessity of the federal charter bill at this time.”
Pickens says the option is being opposed by many legislators as well as state regulators because it could result in a reduction in state revenues from premium taxes. In the case of Arkansas, Pickens says, the state would lose $80 million in revenue.
The point was raised in a Jan. 16 letter to Schumer from State Sen. Neil Breslin, D-N.Y., chair of the National Conference of Insurance Legislators’ Federal Relations Committee in Albany, N.Y. The letter urged Schumer to reconsider his stance on the dual federal charter option.
“Unfortunately, such a change would easily force New York taxpayers to make up for much of the $700 million a year the state now collects from insurance premium taxes. I believe that your colleagues in Congress will no doubt hear from legislators from other states because your legislation also threatens the $9.7 billion the states now receive annually in insurance premium taxes.”
Pickens says the progress state insurance regulators need to make on issues such as speed-to-market and agent licensing will also be discussed at the meeting.
Future action will include work on the Improvements to State-based Systems and Coordinated Advertising Rate and Form Review Authority projects, two speed-to-market initiatives. A review will also be made on the certification of states that comply with the National Association of Registered Agents and Brokers provision of the Gramm-Leach-Bliley Act of 1999, Pickens adds.
Twenty-nine states must comply with this reciprocity agreement for regulating agents in order for the provision not to become effective in November.
To date, according to the NAIC Web site, 39 states have passed legislation or regulation that would satisfy the Act and five states are considering the Producer Licensing Model Act. Thirty-two states plus the District of Columbia have signed reciprocity agreements, the Web site states.
Commissioners will also discuss getting the remaining states that have not taken action on the Producer Licensing Model Act on board, Pickens says.
Reproduced from National Underwriter Life & Health/Financial Services Edition, January 28, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.