Arthur D. Postal / NU Online News Service, July 13, 2004, 6:11 p.m. EDT Washington
Congress can play a “vital role” in reforming the state insurance regulatory system, but that role should be “targeted and limited.”[@@]
Ronnie Tubertini, chairman of the government affairs committee at the Independent Agents and Brokers’ of America, Washington, delivered that message today to the U.S. Senate Banking Committee.
Tubertini, who also is president of SouthGroup Insurance and Financial Services, Jackson, Miss., spoke at the committee’s 5-year review of the passage of the Gramm-Leach-Bliley Financial Services Modernization Act of 1999. Tubertini was the only representative of the insurance industry who testified.
The problems that congressional support can help with in fixing state insurance regulation “fall into 2 categories,” Tubertini said, according to a written version of his remarks. “It simply takes too long to get a new insurance product to market, and there is unnecessary duplicative regulatory oversight in the licensing and post-licensure auditing process.”
In many ways, Tubertini told the panel, “the ‘speed-to-market’ issue is the most pressing and the most vexing from both a consumer and an agent-broker perspective because we all want access to new and innovative products that respond to identified needs.” He added that the “reality of today’s marketplace is that banking institutions and securities firms are able to develop and market new and more innovative products and services quickly, while insurance companies are hampered by lengthy and complicated filing and approval requirements in 50 states.
“As a result, insurance companies?and derivatively, agents and brokers selling their products and services?are at a competitive disadvantage compared to their counterparts in other financial services sectors,” Tubertini said.
The best way for Congress to deal with insurance regulatory problems, he said, was to take the example of National Association of Registered Agents and Brokers, which he called “one of the most significant accomplishments of GLBA for the insurance marketplace.”
Gramm-Leach-Bliley persuaded most states to implement uniform and reciprocal agent and broker licensing standards by threatening to create NARAB if states failed to do so.
There is “no dispute that the NARAB provisions had their intended effect and initiated the move toward licensing modernization at the state level,” Tubertini said.
Therefore, Tubertini said, the independent agents and brokers “believe that there is a vital role for Congress to play in helping to reform the state regulatory system but that such an effort need not replace or duplicate at the federal level what is already in place and successful at the state level.”
The “overarching principles” that should guide federal regulatory efforts in the insurance arena are that “Congress should attempt to fix only those components of the state system that are broken,” Tubertini said. “Second, no actions should be taken that in any way jeopardize the protection of the insurance consumer, which is the fundamental objective of insurance regulation and of paramount importance to the IIABA as our members represent consumers in the insurance marketplace.”
Links to the text of Tubertini’s testimony and other witnesses’ testimony are on the Web at http://banking.senate.gov/index.cfm?Fuseaction=Hearings.Detail&HearingID=121