Lobbyist: Passing OFC Could Take 5 Years

For the most part, Hughes said, the current federal charter bills “track closely with what the industry has done.”

However, the current versions of the bills are likely to change, and the ACLI staff has been working with members to come up with recommendations for revisions to suggest when OFC bills are reintroduced in the next Congress, Hughes said.

Those recommendations will be guided largely by the principles of charter neutrality and exclusivity, Hughes said.

Charter neutrality is supposed to keep the playing field level, by ensuring that the only benefit of opting for federal regulation will be regulatory uniformity.

“The decision of whether to exercise the option or not should be driven by the number of jurisdictions that you’re operating in, or other factors involving how your business operates,” and should not be based on “external factors,” such as tax issues, Hughes said.

The other principle, the “exclusivity” principle, is supposed to ensure that an insurer picks one playing field–either state regulation or federal regulation–and stays there.

“If you choose to remain state-regulated, then what the federal regulator is going to do shouldn’t be a concern for you,” Hughes said.

Insurance company executives and others have talked about enacting a federal charter option that would apply only to life products.

Although excluding property-casualty products from OFC bills would make the Capitol Hill equation simpler, the change could cause new problems by increasing the amount of debate within the industry, Hughes said.

But Hughes noted that health lines have been excluded from the OFC discussion because including health insurance and related products would put OFC legislation under the jurisdiction of more committees and draw the attention of more advocacy groups.

Some in Washington have talked about applying an OFC system first to life products and then to p-c products. Dorgan said she doubts that approach will have much staying power.