Optional Federal Chartering Opponents Duel At Congressional Hearing

But two major p-c associations–the National Association of Mutual Insurance Companies, Indianapolis, and the Alliance of American Insurers, Downers Grove, Ill.–say they will fight OFC and continue to work towards reform of the present system.

Wayne F. White, president of Home Mutual Fire Insurance Company of Conway, Ark., says he fears that OFC would not lead to streamlined regulation.

The fear, he says, is that it would lead to dual regulation, creating an unfair environment for the thousands of smaller companies.

White testified on behalf of NAMIC, which primarily represents smaller p-c companies, some of which do business in only one or two counties of a state.

(Ironically, the nations largest commercial lines company, AIG, and the nations largest personal lines company, State Farm, are also members of NAMIC.)

White says NAMIC is encouraged by the performance of the National Association of Insurance Commissioners following the enactment of Gramm-Leach-Bliley Act in its effort to modernize state regulation.

Moreover, he says, state legislative groups, such as the National Conference of Insurance Legislators, are working to put these modernization initiatives into law.

Congress, he says, should give the states more time to act.

“NAMIC joins with our colleagues in asking for fundamental reform of insurance regulation,” White says. “We disagree with some on the method to bring this about.”

But Bartlett says that even if the state system reforms, that may not be enough. The states may achieve uniformity, he says, but it could be a uniformly bad system.

“We dont want to simply change a grossly inefficient system to a largely inefficient system,” Bartlett says.

Creating an optional federal system, Bartlett says, will create a healthy competition that will improve regulation at both the state and the federal levels, just as it has done in the banking industry.

The subcommittee is scheduled to hold two more days of hearings on OFC this month. ACLI and the National Association of Insurance and Financial Advisors, Falls Church, Va., are expected to submit testimony.

In other news, sources told National Underwriter that a vote on full repeal of the estate tax could take place in the Senate the week of June 17.

These sources quoted Senate Majority Leader Tom Daschle, D-S.D., as telling an industry group that the estate tax issue may be brought to the floor on June 14, with the debate continuing on the 17^th.

Under an agreement between Daschle and Senate Republican leaders, a super-majority of 60 votes will be needed for estate tax repeal to prevail. Sources say they expect the vote to be close.

Reproduced from National Underwriter Life & Health/Financial Services Edition, June 10, 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.