The life industry made another pitch for an optional federal charter Wednesday at a Senate Banking Committee hearing.[@@]
But, speaking on behalf of state insurance regulators, New York Insurance Superintendent Gregory Serio made the opposite plea, arguing that modernization of the current, state-based insurance regulatory system is “on time and on target.”
J. Robert Hunter, director of insurance for the Consumer Federation of America, Austin, Texas, also criticized the optional federal charter proposal in the strongest possible terms. “Consumer organizations strongly oppose an optional federal charter, where the regulated, at its sole discretion, gets to pick its regulator,” Hunter told the panel.
“This is a prescription for regulatory arbitrage that can only undermine needed consumer protections,” Hunter added. “Indeed the drafters of such proposals have openly stated that this is their goal with the optional charter approach. If elements of the insurance industry truly want to obtain ?speed to market’ and other advantages through a federal regulator, let them propose a federal approach that does not allow insurers to run back to the states when regulation gets tougher. We could all debate the merits of that approach.
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“CFA and the entire consumer community stand ready to fight optional charters with all the strength we can muster.”
But life industry representatives, like their property-casualty brethren, criticized the current state of insurance regulation as burdensome due to the fact that the rules vary from jurisdiction to jurisdiction.
“Life insurers today operate under a patchwork system of state laws and regulations that lacks uniformity and is applied and interpreted differently from state to state,” said Arthur F. Ryan, chairman of Prudential Financial Inc., Newark, N.J., and chairman of the American Council of Life Insurers, Washington. “The result is a system characterized by delays and unnecessary expenses that hinder companies and disadvantage their customers.”
Many of the variations between states have been created with little or no reason, according to Brian Atchinson, executive director of the Insurance Marketplace Standards Association, Washington.