House Hearing Boosts Optional Federal Charter

The “collective action barrier” to getting legislators and regulators from 56 jurisdictions to act in complete unison is, and will always be, insurmountable absent federal legislation, he said.

A visitor at the hearing, Rep. Earl Pomeroy, D-N.D., who does not serve on the committee, challenged the interstate compact. Pomeroy, a former NAIC president and North Dakota commissioner, said he believes the NAIC is going down a “dead end” with the interstate compact.

Much has been achieved over 150 years of state regulation simply by coordination among the commissioners, all without the need for legislative bodies to act, Pomeroy said.

It is very unlikely, Pomeroy said, that all state legislatures will act on the compact, and that will give Congress a “bull’s eye” to target in 2 or 3 years.

He told New York Superintendent Greg Serio that he would be shocked if the New York legislature approves the interstate compact. Serio, however, responded that he believes there is a very good chance that the compact will be approved.

Csiszar said NAIC is under no misconception about the difficulty of getting the interstate compact in place. But he added that the compact does not preclude working in a collaborative effort to achieve national standards.

OFC also appeared to get something of a boost from consumer advocate J. Robert Hunter, director of insurance for the Consumer Federation of America, Washington.

He also acknowledged that the life industry is different from the property-casualty industry, which was the focus of the hearing, and that the p-c industry is a “millstone” around the neck of the life industry when it comes to getting an OFC.

Hunter, who testified against OFC, said that if the p-c industry is divorced from OFC legislation, “then we can talk.”

The life insurance industry did not testify at the hearing, but both NAIFA and the American Council of Life Insurers, Washington, submitted statements for the record.

NAIFA Chief Executive Officer David Woods said a road map for reform recently outlined by Oxley and Rep. Richard Baker, R-La., “holds the potential for achieving real change and real improvement in a timely fashion.”

Woods wants to see more details about the Oxley-Baker proposal, but he says the general description that is now available is appealing because it outlines a strategy that would force all states to take action and would rely on the best elements of state regulation to improve the worst problems confronting the system, including licensing and speed-to-market.

The ACLI said it continues to believe that OFC is the best way to address regulatory reform. However, the ACLI noted in its statement, OFC is unlikely in the near term and the problems with the current system persist.

Thus, the ACLI said, it is pleased that the committee is considering a targeted approach that has the potential to make meaningful improvements in the most troublesome areas.

Baker said the hearing is probably the last one the committee will conduct before considering legislation. However, Oxley and Baker did not release any details of their road map during the hearing.