A changing world for life insurance agents led the National Association of Insurance and Financial Advisors to support optional federal chartering of insurance companies and agents as one means to improve the insurance regulatory system, says NAIFAs CEO.
David F. Woods notes that in the past, most life insurance agents conducted most of their business 15 or 20 miles from their offices. But today, he says, many agents are doing business in multiple states.
The difficulty of getting licensed in different states, Woods says, is a factor behind NAIFAs policy change.
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It is time-consuming, expensive and extremely cumbersome, he says.
Similarly, product speed-to-market is an increasing concern, according to Woods. Some states, he says, take as much as 2 years to approve new products and that is not good for consumers or for NAIFA members.
Finally, Woods says, there is the whole issue of increasing federal interest in the insurance industry.
There is no one in Washington, he says, who is responsible for industry oversight and who can act as an advocate not just for consumers, but for the industry as well.
For example, Woods notes the concern over Lifetime Savings Accounts, which would allow individuals to place money in a savings account, earn tax-free interest and withdraw the money at any time for any purpose without penalty.
This represents bad public policy at a time when the country should be promoting long-term savings, says Woods, who adds that he doubts whether the LSA proposal ever would have seen the light of day had there been a federal insurance advocate.
He stresses that NAIFA is in no way turning its back on state regulation.
Indeed, in a formal statement, NAIFA says it continues its century-long support for state regulation of insurance and confirms the associations commitment to improve the state-based system, including the regulatory modernization plan developed by the National Association of Insurance Commissioners.
However, Woods says, times have changed and a federal option may offer a system that can better meet changing times.
NAIFAs policy embraces certain federal initiatives that could work to improve insurance regulation.
These include optional federal chartering, the creation of a federal insurance advocate, an optional national producers license and other federal efforts to improve the regulatory system.
Woods says NAIFA worked closely on this issue with the American Council of Life Insurers. ACLI, he says, has been very sensitive to NAIFAs concerns and is incorporating NAIFAs suggestions in an OFC model.