The prospects for Congress ultimately to provide an optional federal charter for life insurance companies are brightening, the head of the industry’s top trade group says.
In comments at the American Council of Life Insurers’ annual conference in Washington, D.C., today, Frank Keating, ACLI president and chief executive officer, said the issue with the optional federal charter is not “whether there will be an OFC for life, but when.”
Elaborating on Keating’s remarks later, Kim Olson Dorgan, the ACLI’s top lobbyist, said members of Congress believe it is difficult to impose standards on the financial services industry that include the insurance industry because that business is mostly state regulated.
That means that under the current system, Congress has no way of enforcing any standards it seeks to impose on insurance companies, Dorgan said, including such issues as data security.
In an issue of growing concern to the insurance industry, Rep. Debbie Wasserman Schultz, D-Fla., introduced H.R. 3639, a bill that 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.”
Schultz says the law was intended to block insurers from denying or restricting life insurance policies to individuals traveling to Israel.
In comments during a panel discussion Sunday at the ACLI meeting, Jim Poolman, North Dakota insurance commissioner, voiced concern that such legislation is gaining support in Congress. Poolman said the NAIC had established a group to look into the issue.
Schultz’s bill, now under consideration in the House Financial Services Committee, would establish federal enforcement standards if an insurer denied coverage based on disclosure by an applicant for insurance of future foreign travel plans.
In his comments, Keating said that it is likely OFC legislation for life insurance and property-casualy carriers will be introduced in the Senate by the end of the year.
Sens. John Sununu, R-N.H., and Tim Johnson, D-S.D., have expressed interest in introducing such a bill, Dorgan explained later. In the House, Reps. Ed Royce, R-Calif., and Paul Kanjorski, D-Pa., both members of the House Financial Services Committee, are likely to introduce a similar bill, although that would cover life insurance carriers only.
Dorgan also discussed the potential impact of the State Modernization and Regulatory Transparency Act. SMART, being drafted by the majority staff of the House Financial Services Committee, would establish standards for state regulators in establishing rules and laws for the insurance industry.
Dorgan said the Republican leadership of the House panel appears to be focusing on property/casualty issues in SMART, whose introduction has been continually delayed since a draft was leaked in July 2004.
“It is clear to us that the life section is not something that Rep. Mike Oxley, R-Ohio, chairman of the committee, is focused on at this time,” Dorgan explained later.
But uniform producer licensing standards, of major interest to ACLI members, continues to be a major focus of the drafters of SMART, Dorgan said.