A large group of financial services organizations is facing off with a big property-casualty trade group over whether Congress should give insurers the option of choosing between state and federal oversight.[@@]
The 135 financial services groups and companies that belong to the new Optional Federal Charter Coalition sent a letter Monday to the Senate Banking Committee that emphasizes the benefits of creating an optional federal charter.
“Consumers, and the insurers and insurance agents that serve them, need a modern insurance regulatory system that provides greater product choice and portability,” the Optional Federal Charter Coalition says in the letter, which went to all members of the Senate Banking Committee.
Today, under the current state-run insurance regulatory system “the burden of having to comply with rules from 56 separate insurance regulators is too inefficient for companies, agents and consumers to manage, especially those whose interests are national in scope,” the coalition writes. “Individual state regulators cannot speak to our national or global interests with the same scope and effectiveness as a strong, federal entity, such as the U.S. Department of Treasury or the Federal Reserve.”
Letting insurers and agents choose between state and federal regulation would create a system similar to the dual-banking system that has been in place for banks for more than 140 years, the coalition writes.
But “establishing an optional federal charter would not supplant state regulation or state premium taxation, the coalition writes.
Coalition members include the American Council of Life Insurers, Washington; the American Bankers Insurance Association, Washington; several large property-casualty trade groups; and many insurers.
Some of the life insurers on the list of OFCC letter signatories are John Hancock Life Insurance Company, Boston; Massachusetts Mutual Life Insurance Company, Springfield, Mass.; Northwestern Mutual Life Insurance Company, Milwaukee; Phoenix Companies Inc., Hartford; Principal Financial Group Inc., Des Moines, Iowa; Prudential Financial Inc., Newark, N.J.; and Sun Life Financial Inc., Toronto.
But a major property-casualty trade group, the Independent Insurance Agents and Brokers of America, Washington, argues that a federal charter option is still “not the best or right solution for regulatory reform in the industry.”