A large number of financial services companies, including Prudential, Northwestern Mutual and New York Life, are signing up to support legislation that would create an optional federal charter.
Interestingly, the letter these companies are signing would be sent to the leadership of the Senate Banking Committee, not the House Financial Services Committee, even though the House panel is much farther along in dealing with insurance regulation modernization legislation than is the Senate panel.
In fact, the House panel’s staffers and leadership are meeting with a number of different groups to solicit their views on the shape of financial services legislation.
Introduction of legislation that would create federal standards for state insurance regulation is expected in July. Action within the committee on such legislation is now expected in the fall, industry lobbyists say.
Signers of the letter to be sent to the leadership of the Senate panel are being solicited by a group known as the Optional Federal Charter Coalition. Its latest initiatives include creating a group of insurance agents who are voicing support for a federal charter (see story below), as well as soliciting signatures from financial services companies and state banking associations.
The group, led by the American Bankers Insurance Association, is meeting with financial services companies throughout the country to seek support for a letter it plans to send to the leadership of the Senate Banking Committee.
Other members include the American Council of Life Insurers, the American Insurance Association, the Council of Insurance Agents and Brokers, and the Financial Services Roundtable.
The letter, a copy of which was obtained by National Underwriter, is dated June 3. It would be sent to Sen. Richard Shelby, R-Ala., and Sen. Paul Sarbanes, D-Md., chairman and ranking minority member, respectively, of the committee, according to the letter. But one source said the letter also would be sent to the other members of the Senate Banking panel.
Beth Climo, who heads the ABIA, said a similar letter already has been sent to Sen. John Sununu, R-N.H., and Sen. Tim Johnson, D-S.D.
On May 25, the group met with the Association for Advanced Life Underwriting and Massachusetts Mutual Life Insurance Company in order to persuade them to sign. Massachusetts Mutual is expected to sign, but spokesmen for AALU were not available for comment.
Kevin McKechnie, director of government relations for ABIA and its associate director, confirmed that companies are being asked to sign the letter. But, he said, “It hasn’t gone, and it may not go.”
He added that it is “one of our ideas in draft form.”
The letter says, “Consumers, and the insurers and insurance agents that serve them, need a modern insurance regulatory system that provides a greater product choice and portability, takes into consideration the demands of both the national and regional insurance marketplaces, and creates a national insurance regulator in Washington to address the growing list of national and international issues facing our industry.
“Accordingly, we are writing to urge you to study the problems with the current state-based regulatory system and to consider an Optional Federal Charter as an appropriate solution,” the letter continues.
The two-page letter adds that, “Establishing an Optional Federal Charter would not supplant state regulation; it would simply provide an alternative to it.”
Besides Prudential, Northwestern Mutual and New York Life, other insurance companies that have signed on include Aegon, AIG, Allianz, Allstate, AXA, Assurant, Bankers Fidelity Life, Chubb, Citigroup, Golden Rule, Great-Western Life, Lincoln, Manulife Financial, and its U.S. subsidiary, John Hancock, Phoenix Life, Principal, National Life, OMNIA Ltd. (Bermuda), Pacific Life, Protective Life, Reliance Standard Life, S&T Insurance Group and Securian.
Other financial services firms that have signed the letter so far include American Express, Bank of America, BB&T, Citigroup, Comerica, HSBC NA, Hibernia National Bank, J.P. Morgan Chase, Keycorp, MBNA and Mellon Financial.
Sen. Richard Shelby, R-Ala., who is chairman of the Senate Banking Committee, may soon receive a letter from a large group of companies pushing for an Optional Federal Charter.