The House Financial Services Committee is developing a streamlined version of the State Modernization and Regulatory Transparency Act that would give strong regulatory authority to home-state regulators.
The redrafting could reduce the complexity of the bill and cut it to 60 pages, from the original length of about 300 pages.
SMART advocates are hoping the shorter version will make the bill less controversial, increase industry interest, and take attention away from an optional federal charter bill introduced in late April by 2 members of the Senate Banking Committee.
The SMART bill seems to be getting some support from the property-casualty insurance industry but little from the life insurance industry.
The latest version of SMART would give a home-state regulator “pre-emptive” national licensing authority over insurance agents in the regulator’s state and over carriers domiciled in the regulator’s state.
The regulator of the state of the policyholder would have pre-emptive authority over surplus lines.
The latest version would eliminate a “partnership” system described in earlier versions of the bill. The partnership system provisions would have created a federal office that would have worked with state officials to coordinate insurance regulation.
The revised bill also would set “prescriptive standards.” State regulators would have to meet the standards by a certain date or face sanctions, according to a lawyer who has seen a draft.
Staffers are preparing the draft for Reps. Michael Oxley, R-Ohio, chairman of the committee, and Richard Baker, R-La., chairman of the committee’s capital markets subcommittee.
A panel spokesperson confirms “that there has been some redrafting,” but says no final decision has been made about whether a new version of the SMART bill will be introduced this year.
Several lobbyists familiar with the redraft say they believe the current draft of the streamlined bill is likely to undergo extensive changes before being introduced.
The SMART revision effort is getting mixed reactions from industry groups.
“Moving to jump start the SMART bill and streamline it proves what we have known from the beginning — this policy proposal is fatally flawed,” says Peter Ludgin, executive director of Agents for Change, Washington, a group that consists primarily of life agents.
“Insurance agents and brokers want the option of being regulated by the states or the federal government,” Ludgin says. “It is as simple as that. This is about efficiency, speed to market, servicing customers across state lines, licensing hassles, competition in the marketplace, and, ultimately, what is best for the consumer. Customers should not have to forgo their current relationships and seek a new insurance agent every time they move or open a business across state lines.”
But Joel Wood, senior vice president for government affairs at the Council of Insurance Agents and Brokers, Washington, an optional federal charter supporter, is praising the SMART effort.
SMART “would specifically address — and resolve — all the regulatory problems for agents and brokers in the surplus lines and licensure arena,” Wood says. “Those are the 2 principal interfaces of agents and brokers with the regulatory processes, and any reform in those areas is greatly welcome. I, for one, will follow the lead of Chairman Baker in supporting whatever approach he chooses to resolve these issues and insurance modernization in general.”