The prospects for Congress ultimately to provide an optional federal charter for life insurance companies are brightening, said the head of the American Council of Life Insurers last week.
In comments at the group’s annual conference here, Frank Keating, ACLI president and CEO, said, regarding the optional federal charter, that the issue is “not whether there will be an OFC for life, but when….”
The group’s top lobbyist, Kimberly Olson Dorgan, elaborated on Keating’s remarks later. Dorgan is senior vice president, federal relations, for the ACLI.
She explained that his optimism stems from determinations by members of Congress that the financial services industry must be looked at as one entity but that in drafting legislation covering the entire industry, it is difficult to impose standards that include insurance because that industry is predominately state regulated.
That means under the current system, Dorgan said, Congress has no way of enforcing any standards it seeks to impose on insurance companies as part of the financial services system because there is no enforcement mechanism.
Specifically, Dorgan said, that deals with such issues as data security. Another issue that is of apparent growing interest to Congress deals with life insurance underwriting standards concerning travel.
Regarding data security, legislation recently was introduced by Rep. Steve LaTourette, R-Ohio, that illustrates the split within the industry. Under the legislation as introduced, enforcement for insurance companies will be by the so-called functional regulator, in this case, state insurance commissioners. But the industry is split on the issue by its vision for the future. For example, the National Association of Mutual Insurance Companies supports the provision in the bill because its members want to continue to be state regulated. The Property Casualty Insurers Association of America wants the Federal Trade Commission to regulate insurers. And the ACLI, while finding state enforcement acceptable, lobbied for oversight and enforcement by the Treasury Department, because it wants the option to be regulated by a federal agency within Treasury.
Another issue of growing concern to the industry is H.R. 3639, a bill introduced by Rep. Debbie Wasserman Schultz, D-Fla., which would bar an insurer from denying life insurance, or establishing higher rates, based on “the intent of such person to engage in future lawful foreign travel.”