Proponents of an optional federal charter are deservedly celebrating the introduction in the U.S. Senate earlier this month of legislation that would establish such a system as a means of regulating insurance.

The fact that this legislation was introduced at all is a signal achievement. And if nothing else, it shows the renewed lobbying prowess of the American Council of Life Insurers after a period of somewhat diminished clout.

But even as these OFC proponents go about their celebratory business, they must also know that this is “don’t hold your breath” time for the legislation, officially known as S. 2509, The National Insurance Act of 2006.

For this year at least, the legislation stands as much chance of being enacted as does that proverbial snowball in the netherworld.

Nonetheless, Frank Keating, president and CEO of the ACLI, greeted the bill by saying, “The measure would bring the insurance regulatory system into the 21st century by giving insurance companies a choice between exclusive federal or state regulation.”

I’m sure Keating realizes that we are still pretty early in the 21st century and the passage of legislation that makes such a break with the past often can take years, if not decades, to enact. Thus my advice: Don’t hold your breath.

But at least the Senate was able to see the introduction of a bill on insurance regulation. The House, by comparison, has been diddling for years with something called the State Modernization and Regulatory Transparency Act. In what is coming to seem a more and more unfortunate acronym, SMART is looking anything but.

But back to where the action is, the Senate. If the cosmic correlation between favorite ice cream flavors and karma holds true, I hope that OFC proponents like Rocky Road because that’s what they’re going to be facing as opponents gather their weapons.

The Independent Insurance Agents and Brokers of America, which has long opposed any kind of OFC arrangement, was quickly out the door with a statement by Charles Symington, its senior vice president of government affairs and federal relations.

“The IIABA and our membership of 300,000 individuals from across the country strongly oppose this short-sighted legislation as we believe it will eventually only lead to increased regulatory burden on our membership and will be harmful to consumers,” Symington said shortly after the bill was introduced. “Our opposition will be readily apparent on Capitol Hill when we fly in more than 1,500 insurance agents later this month to oppose this bill.” Uh-oh.

Also opposed to the bill is the National Association of Insurance Commissioners, which sees itself being marginalized (at the least) if the dual regulatory system that the bill envisages is put into effect. As we all know, job security (even in a revolving door profession) can be a prime motivator for tooth-and-nail opposition to something new.

And then there’s the National Association of Insurance and Financial Advisors, which seems to be sitting on the fence regarding the Senate bill and when last heard from was “studying” it.

Any of these groups separately would be formidable opponents; together they indicate that “don’t hold your breath” is apt counsel at the moment. Unless, of course, OFC proponents really, really like the color blue.

Steve Piontek

Editor-in-Chief