A California lawmaker has introduced the House version of an “optional federal charter” bill that is already in play in the Senate.
Rep. Ed Royce, R-Calif., has dubbed the bill, H.R. 6225, the National Insurance Act of 2006. The bill would give insurers a chance to choose between regulation by state agencies and regulation by a new federal insurance agency.
“I believe the time has come for both houses of Congress to address the inefficiencies in the insurance marketplace,” Royce says in introducing the bill.
The National Insurance Act would create a federal regulatory agency within the U.S. Treasury Department, but it would leave the current state regulatory system in place, Royce said.
Royce praised the work of Sens. John Sununu, R-N.H., and Tim Johnson, D-S.D., who have introduced S. 2509, the Senate OFC bill, in the Senate.
Insurance industry officials say H.R. 6225 is similar to S. 2509 but includes some technical corrections.
The American Council of Life Insurers, Washington, and the National Association of Insurance and Financial Advisors, Falls Church, Va., have welcomed the introduction of H.R. 6225.
“The need for this legislation is clear,” ACLI President Frank Keating says. “Today’s patchwork system of state laws and regulations has fostered a system of inefficiencies that ultimately affects consumers’ access to the financial tools they want and need.”
But the ACLI will continue to work closely with state regulators to promote uniformity, efficiency and stronger consumer protections at the state level, because many insurers will continue to choose state regulation, Keating says.
NAIFA also is emphasizing the importance of strengthening both state and federal insurance regulation.
“NAIFA is committed to improving the state-based regulatory system and remains open to good-faith reform initiatives, state or federal, that will help agents better serve the public,” NAIFA President John Davidson says.
The Optional Federal Charter Coalition, a coalition that includes the ACLI and other groups, says it looks forward to working with Royce and other members of the House to improve the current state-based regulatory system.
“The introduction of optional federal charter legislation fuels the debate on modernization of America’s insurance laws to meet the needs of our customers,” the coalition says. “It is clear that a growing number in Congress are coming to the conclusion that the current patchwork regulatory system is unacceptable for both consumers and the economy.”