Bipartisan legislation calling for creation of an optional federal charter will soon be introduced in the House, one of the sponsors of such legislation in the Senate said today.
In disclosing the plans of Reps. Ed Royce, R-Calif., and Paul Kanjorski, D-Pa., to introduce such legislation, Sen. John Sununu, R-N.H., said the lawmakers should work to maintain the broad focus of the Senate optional federal charter legislation when they introduce their version.
Sen. Sununu made his comments in a speech at a Washington meeting of the Property Casualty Insurers Association of America, based in Des Plaines, Ill.
A number of lobbyists and congressional staffers confirmed the plans of Royce and Kanjorski, but the offices of these representatives did not return phone calls seeking comment on the substance of their bill and when they plan to introduce it.
Sen. Sununu said that limiting the optional federal charter solely to life insurance, as has been suggested, would limit the debate on the issue and send a bad signal that sponsors would accept passing anything over failing with a proper bill.
“I don’t think it should be, and I don’t think it needs to be” only for life insurance when introduced in the House, Sen. Sununu said.
Sen. Sununu added that he believed the efforts to limit the proposal were not coming from the House sponsors, saying, “I don’t think that’s their thinking,” but there might be others encouraging the limitation.
“That attitude suggests that the goal is just to get something passed, rather than a framework that works for thousands of consumers and the industry,” he said.
Part of the bill’s potential success, Sen. Sununu said, is that it “applies broadly rather than narrowly,” and that inclusion of property and casualty lines will increase the number involved in the debate over a federal solution.
Additionally, he said, a federal system is important because of the increasing scale of the insurance industry, which stretches across national borders as well as state lines. “When you recognize that,” he said, “it makes even less sense for there to be 53 or 52 different regulatory regimes.”
Sen. Sununu said he has also been helped, if not supported, in crafting the legislation by state regulators, especially in areas such as premium taxes and guaranty funds.
“State regulators, I don’t expect to ever support the concept of federal regulation,” he said.
Sen. Sununu acknowledged that there would be no quick passage of the bill, saying it will be “a marathon, not a sprint.” But he said the bill proposed by himself and Sen. Tim Johnson, D-S.D. would provide “a good platform for discussion in hearings of the Banking committee that will take place this year.”
Another benefit of a federal regulatory system, Sen. Sununu said, would be that it provides the federal government with a place to turn to understand insurance issues after a catastrophic event. “We’d have a national voice,” he said. “We’d have a national player that would be at the table.”
The government has had to deal with two such events in recent years–Hurricane Katrina and the attacks of Sept. 11, 2001. Sen. Sununu said that similarities can be seen in the issues of both events, in their effects on property and casualty lines, and in the case of Katrina, flood insurance.
“The way we’ve dealt with them, and the reason we took them up, were sort of forced on us,” he said.
The concern, Sen. Sununu said, was striking a balance between the public sector and the private market. “I do believe, to a great degree, we’ve met the challenge.”