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Regulation and Compliance > Federal Regulation

Senate Panel Mulls Insurance Regulation

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A life insurance executive will appear on Capitol Hill today to praise the optional federal charter concept, a state regulator will promote state regulation, and a consumer advocate will pan 2 proposals now getting attention from lawmakers.

Those witnesses are just 3 of the many witnesses scheduled to appear at a hearing on insurance regulatory reform organized by the Senate Banking Committee.

John Johns, chairman of Protective Life Corp., Birmingham, Ala., will speak for the American Council of Life Insurers, Washington, and Maine Insurance Superintendent Alessandro Iuppa, president of the National Association of Insurance Commissioners, Kansas City, Mo., will speak for the NAIC.

Travis Plunkett, legislative director of the Consumer Federation of America, Washington, is in the lineup to represent the CFA.

Johns will tell lawmakers that “many life insurers believe that regulatory modernization is nothing short of a survival issue,” according to an advance version of his remarks.

“The speed with which progressive change [in insurance regulation] takes place is critical,” Johns says in the written version of his remarks.

But Johns will be praising the NAIC for implementing the new interstate compact, which will be creating a body that will take in product filings for at least 27 states and could eventually take in filings for far more states.

“The ACLI is fully committed to the interstate compact concept and is working with state regulators and legislators to pass legislation necessary to have every state become a part of this mechanism,” Johns says.

Iuppa is preparing to pan the optional federal charter proposal, which would give insurers a choice of coming under the jurisdiction of state or federal regulators.

“A bifurcated regulatory regime with redundant and overlapping responsibilities…will result in policyholder confusion, market uncertainty, and other unintended consequences that will harm individuals, families and businesses that rely on insurance for financial protection against the risks of everyday life,” Iuppa says in the advance version of his testimony.

Plunkett is gearing up to criticize both the OFC approach, as outlined in S. 2509, and the State Modernization and Regulatory Transparency Act proposal, which has been gestating in draft form in the House Financial Services Committee for several years.

The SMART Act bill would attempt to use “federal tools” to press states to do a better job of coordinating state insurance laws and regulations.

Insurers’ recent decision to support federal regulation “is based solely on the notion that such regulation would be weaker,” Plunkett says in the advance version of his remarks. “Insurers have, on occasion, sought federal regulation when the states increased regulatory control and the federal regulatory attitude was more laissez-faire.”


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