Optional Federal Charter Gets Boost At House Hearing

Throughout the course of 14 hearings in the committee, he said, it has been demonstrated that the states cannot get the job done by themselves.

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 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, he said, all without the need for legislative bodies to act.

It is very unlikely, Pomeroy said, that all state legislatures will act on the compact, and that will give Congress a “bulls 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 it will be approved.

Csiszar said NAIC is under no misconception about the difficulty of getting the interstate compact in place. But he added 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.

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 submitted statements for the record.

NAIFA Chief Executive Officer David F. Woods said a roadmap 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.”

Depending on the details, which have not yet been released, Woods said the Oxley-Baker proposal is appealing because it relies on the best elements of state regulation to improve the worst problems confronting the system, including licensing and speed-to-market, and forces all states to take action.

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

Thus, ACLI said, it is pleased that the committee is considering a targeted approach, which 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 roadmap during the hearing.

Reproduced from National Underwriter Edition, April 2, 2004. Copyright 2004 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.