The National Association of Independent Life Brokerage Agencies has joined the list of trade groups voicing support for an optional federal charter.
The trade group’s support for an OFC was stated in a letter to Sens. John Sununu, R-N.H., and Tim Johnson, D-S.D., the members of the Senate Banking Committee who introduced legislation creating an OFC in April. The bill is S. 2509.
NAILBA said in the letter that it believes a federal charter option for the life industry “will improve the procedures that enable insurance carriers and agents to provide competitive and efficient products to consumers throughout the U.S. in a timely fashion.”
NAILBA added that it believes a federal charter option “will also provide uniform and equal opportunities to every citizen in all states to access similar products and protections.”
The decision to come out in favor of an OFC followed a debate within NAILBA’s governing body that has lasted since May 1, said Joe Normandy, a staff official. It finally was recommended by NAILBA’s public affairs committee and approved unanimously by its board, he said.
“Both NAILBA’s members and their customer agents would benefit from S. 2509,” NAILBA Chairman Matthew J. McAvoy said, in announcing support for an OFC. “Single point product filing, single point licensing, conformity of licensed agent continuing education requirements and standards, and consistency in application forms and product design in all 50 states are provisions which would make the industry more efficient.”
“Additionally,” McAvoy continued, “cost savings to the carriers would be reflected in more competitive products offered to consumers and reduced operational costs to NAILBA’s member agencies and the agent community. Consumers and the insurance industry would all benefit significantly from uniformity and reduced costs.”
Currently, the American Council of Life Insurers and the Association for Advanced Life Underwriting have voiced support for an OFC among life industry trade groups. The National Association of Insurance and Financial Advisers is more circumspect, saying it is looking at all options for insurance industry regulation in the future.
The insurance industry is subject to a myriad of state regulations that have stifled competition, innovation, and growth, McAvoy said. “A more uniform regulatory environment is long overdue,” he added. “This comprehensive legislation will allow life insurers to choose federal rather than state charters under an ‘optional federal charter’ regulatory system.”
He said NAILBA supports federal regulation of insurance that would put the insurance industry on “equal standing with other financial services industries.
“This centralized system will also provide further protections for the consumer,” he said.