NU Online News Service, May 9, 4:55 p.m. — New York
Speakers agreed here Wednesday that Congress is unlikely to create a “federal charter option” for insurers during the current session.
The federal charter option proposal now in play on Capitol Hill would give insurers the choice of staying with state insurance regulators or applying for a federal charter and coming under the jurisdiction of a new, federal insurance regulatory agency that would resemble the Office of the Comptroller of the Currency.
An optional federal charter would create “uniformity and efficiency” but insurers could not use it to escape regulation, Gary Hughes, general counsel of the American Council of Life Insurers, Washington, said here at an executive life insurance conference organized by PricewaterhouseCoopers L.L.P., New York.
ACLI has been working hard to promote the federal charter proposal.
But regulators and former regulators argued that consumers need more help with insurance matters than a federal agency could provide.
Robert Hunter, a representative from the Consumer Federation of America, Washington, scoffed at the idea of giving insurers a chance to pick their own regulators.
“I don’t blame [the insurance industry] for wanting an OCC-type system,” Hunter said. “Who wouldn’t want a lapdog regulator?”
Creating an optional federal charter system would hurt consumers by putting too much pressure on state regulators, Hunter said.
For now, Hunter said, the issue is on the back burner, but he added that “a few more embarrassments like janitor’s COLI” could force Congress to pay more attention.