NAIFA Backs Congress Acting On Insurance Regulation
The nations leading life insurance agents association says it now supports Congressional action to improve and augment the regulation of insurance.
In a new position adopted at its recent annual meeting, the National Association of Insurance and Financial Advisors, Falls Church, Va., says that it continues to support the “principles” underlying state regulation of insurance.
However, says David Winston, NAIFAs vice president of government affairs, NAIFAs new position will allow the association to be fairly represented during the debate over optional federal chartering (OFC) and national treatment.
Winston says that the new position is an imperative given the sea of change in the industry.
Indeed, several major industry associations now support or are considering some type of federal action on insurance regulation.
The American Council of Life Insurers, Washington, as well as a major property-casualty group, the American Insurance Association, Washington, support OFC.
On the agency side, the Independent Insurance Agents and Brokers of America and the National Association of Professional Insurance Agents, two Alexandria, Va.-based p-c groups, support national treatment.
The Council of Insurance Agents and Brokers, Washington, which represents large p-c brokers, supports OFC.
Winston says NAIFAs new position assures that the group will have a seat at the table in the upcoming debate to represent the interests of its members.
Under its new position, NAIFA says that any federal action aimed at improving the system must reflect certain guidelines.
First, with respect to agent licensing and continuing education requirements, NAIFA says that all insurance agents should be licensed and that duplicative licensing requirements should be eliminated.
Each insurance agent, NAIFA says, should be required to demonstrate to only one regulator that he or she is qualified to be licensed and represent either a state-chartered or federally-chartered insurer.
NAIFA says that uniform substantive and procedural licensing requirements should be established for each class of similarly situated agents, and that each insurance agent should need to satisfy only a single set of continuing education requirements for each line of business.
The uniform licensing requirement, NAIFA says, should include a mandatory criminal background check. NAIFA adds that a database, which would be available only to financial services regulators, should be established to identify those who have committed fraud.
Turning to consumer protection, NAIFA says that the tax incentives supporting life insurance and other insurance products must be preserved. Uniform trade practices and consumer protection requirements should apply to all insurance sales and service activities, NAIFA says.
Insurance companies, NAIFA says, must adhere to adequate solvency standards that include guarantee funds or similar fail safe mechanisms.
Regarding rates and forms, NAIFA says that all duplicative filing and approval requirements should be eliminated and uniform filing and approval requirements established.
However, NAIFA says, “quality to market” concerns should not be sacrificed for “speed to market.”
In addition, NAIFA says, any rate and form changes should be viable for both accumulation and risk-shifting products.
Finally, regarding changes in regulatory rules and procedures, NAIFA says that current regulatory expertise should be preserved to the maximum extent possible consistent with efficient regulation.
Agents, NAIFA adds, must be allowed the genuine option of whether to submit to any newly created regulatory authority.
Finally, NAIFA says, agents should have an institutionalized role in the development and application of all new regulatory rules, structures and procedures.
On the terrorism insurance front, President Bush met with leading members of Congress last week who agreed to try and reach an agreement on creating a federal backstop for losses caused by terrorism by Friday, Oct. 4.
However, the widespread view is that the effort to reconcile the different proposals, H.R. 3210 in the House and S. 2600 in the Senate, would take longer.
Still undecided is whether group life insurance will be included in the final bill as a line qualifying for federal assistance.
A major effort is under way to achieve that end. Indeed, associations representing fire fighters and police officers last week sent separate letters to Capitol Hill urging Congress to protect group life.
The International Association of Fire Fighters, Washington, says in its letter that in Utah, for example, employees have been informed that in the event of a terrorist attack, group life coverage would be limited to 10% of the face value of the policy.
“That is unacceptable,” the associations general president, Harold A. Schaitberger says.
“More than a year has passed since 343 brave fire fighters gave their lives at ground zero. Congress must enact legislation to protect the protectors, who place their lives in jeopardy each and every day,” he says.
Similarly, Steve Young, president of the Fraternal Order of Police, Washington, says that law enforcement officers need to know that, in the event of another deadly attack, their life insurance policies will take care of the families they leave behind.
For updates on the resolution of the terrorism insurance issue, check the National Underwriters Internet site at www.nationalunderwriter.com.
Reproduced from National Underwriter Life & Health/Financial Services Edition, October 7, 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.