Rival insurance agent groups who dispute each other’s concepts for insurance regulation reform have clashed in print with dueling op-ed pieces in a Capitol Hill newspaper.
The implication of the exchange in The Hill, a thrice-weekly tabloid circulated primarily on Capitol Hill, over the last several weeks over legislation that would create an optional federal charter is that insurance regulation will be a hot topic in Congress next year regardless of who is in the majority.
Some proponents of federal regulation have also proposed a life-only OFC under the premise that life products are more suited to federal regulation.
The issue of insurance regulation also came up in comments made by Sen. Trent Lott, R-Miss., to The New York Times that he will introduce next year legislation “challenging” the industry’s exemption from anti-trust laws.
In any event, a new agents’ group, Agents for Change, wrote an op-ed piece in The Hill on Oct. 11, criticizing as a mere “band-aid” an earlier op-ed piece by the CEO of the Independent Insurance Agents and Brokers of America. That earlier piece said insurance regulation needs to be reformed, but that reform should remain state-centric.
The comments by Peter Ludgin, executive director of Agents for Change, was prompted by an op-ed piece by Robert Rusbuldt, CEO of the IIABA, which acknowledged that “serious, significant reform” of insurance regulation is needed.
Rusbuldt proposed in his statement a 3-step reform plan calling for “vigorous, but targeted” reform and modernization of the current state regulatory system.
A new NARAB
The keystone of the IIABA proposal is a new “NARAB,” or National Association of Registered Agents and Brokers, an entity created by the 1999 Gramm-Leach-Bliley law that resulted in some state uniformity in licensing of producers.
In his response, Ludgin said he “applauded” Rusbuldt’s proposal because “ideas matter.”
But, Ludgin added, “NARAB II is a band-aid solution. Today, some of the largest markets are not fully participating in NARAB, many states are not truly reciprocal, and it has done little to fix agency licensing problems.”
He was also critical of Rusbuldt’s call for “significant reforms” to be made to the product approval process for life and property-casualty forms.
For life products, Rusbuldt said, “which are more national in scope, federal legislation could build upon the National Association of Insurance Commissioners interstate compact for approval of life, disability, and long term care policy forms.”
Ludgin, however, said that regarding point of entry for life products, the NAIC’s interstate compact “is a positive step in the right direction.
“But it has also proved just how difficult it is to get 56 jurisdictions onboard without federal intervention,” Ludgin said. “Only 28 states, representing 44% of the premium volume, have approved the compact. Moreover, states can opt out at any point.