The Association of Advanced Life Underwriting last week joined several other insurance trade groups in voicing support for the “concept” of an optional federal charter.
Other life insurance industry supporters of an OFC include the American Council of Life Insurers.
At the same time, the National Association of Insurance and Financial Advisers remains neutral, saying it will work with both federal and state officials to improve regulation of the life insurance industry.
“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,” said John Davidson, NAIFA’s newly elected president, an insurance agent based in Thousand Oaks, Calif.
In a statement to members, the AALU said the advantage of the “concept” of OFC legislation is that it “could be helpful for producers and clients to have a federal regulator with expertise on life insurance issues who has the same kind of credibility with Congress and the administration that the Office of the Comptroller of the Currency has on banking issues.”
The “primary risk” of OFC legislation, the AALU said, is that “federal regulation of life insurance has not yet been tried and there could be significant harm if poor regulation results.”
The position paper added that, “AALU does not currently believe this is likely, but it is important that risk be mitigated by the specifics of the national regulatory structure that is created and by ongoing regulatory choice for life insurance producers and carriers.”
The AALU statement was prompted by the Sept. 28 introduction of H.R. 6225, the National Insurance Act of 2006, by Rep. Ed Royce, R-Calif.
At the same time, a new coalition of insurance companies, trade associations, and agents and brokers known as the Coalition Opposed to a Federal Insurance Regulator (COFIR) voiced opposition to the bill.
Greg Wren, a state legislator in Alabama and executive director of COFIR, said H. R. 6225 and the Senate version, S. 2509, would dismantle a 135-year old system in place and operational in all 50 states.
“While we acknowledge that insurance regulation should be streamlined, we believe establishing another federal office to do so is not the answer,” Wren said. Its members include the Independent Insurance Agents and Brokers of America, which also independently put out a statement voicing opposition to the Royce bill.
The House bill is a “companion” bill to similar legislation introduced in the Senate in April.
“The National Insurance Act would create a federal regulatory agency within the Treasury Department; however, it would leave the current state regulatory system in place,” he added.
“Taking power away from the states and centralizing it in Washington will only complicate issues for insurance companies, agents and brokers and, most important, consumers of insurance services,” Wren said.
Wren also said that COFIR favors reform of existing state insurance regulation “but believes empowering a federal regulator to oversee that reform is not a viable solution.”