Introduction of legislation establishing an optional federal charter for insurance companies–both life and property-casualty–is “imminent,” say several industry sources.
It could be introduced before Congress leaves for its spring recess or when it returns on April 24, according to a number of insurance industry lobbyists.
The bill is being introduced by Sen. John Sununu, R-N.H., and Sen. Tim Johnson, D-S.D. No additional co-sponsors have agreed to join them, the lobbyists said.
Staff officials in Sununu’s office declined repeated requests for comment on their plans late last week.
The bill is in final draft form and is being circulated to stakeholders, i.e., insurance industry trade group officials and lawyers, for their reaction, several lobbyists said.
Staffers for the two senators have been saying for months that they planned to introduce the bill.
The Senate bill will call for creation of an optional federal insurance charter for both life and p-c insurers, said Jamie Burnett, Sununu’s legislative director, who discussed the plans at an Industry Summit held in Washington on March 1.
Burnett said the bill will call for creation of an independent federal regulator within the Treasury Department, similar to that of the Office of the Comptroller of the Currency.
Gary Hughes, executive vice president and general counsel for the American Council of Life Insurers, said later during the summit that one advantage of the Senate bill is the regulatory system proposed in it will have no impact on the federal budget.
Hughes said then that the industry has agreed through the legislation to be introduced in the Senate to pay the cost of federal regulation through fees, the same system used by national banks, and even to pay the cost of establishing the system within Treasury.
Under the plan, Burnett said, the state guaranty fund system would remain in place, presumably with the states serving as liquidators for an insolvent federally chartered insurance institution.
It is unclear when any legislation calling for reform of the insurance regulatory system will surface in the House. Legislation–dubbed the State Modernization and Regulatory Transparency Act–calling for creation of so-called federal “standards” or “tools” designed to bring uniformity to state regulation has been in the draft stage for several years.