While the prospects for an optional federal charter remain unclear, it appears increasingly likely that such a charter would not be limited to life products, according to members of Congress, speaking at an event in Washington.
“A year ago, I would have said that property and casualty is not likely to be included [in an OFC],” said Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee.
However, he said, property-casualty lines have become more central to the discussion because of lawmakers in states affected by the hurricanes of 2005 and the disputes with insurers that took place over the handling of claims.
The lawmakers who introduced OFC legislation in the last Congress also spoke about the issue, arguing that limiting the OFC proposal solely to life products could ultimately hurt the bill’s chances.
Rep. Frank made his comments at the Networks’ Financial Annual Insurance Reform Summit. Also speaking was Rep. Ed Royce, R-Calif., a member of the Financial Services panel and the sponsor of OFC legislation in the House last year.
Rep. Royce said that a life-only charter might be easier politically because the “insurance agent lobby might be less inclined” to oppose such a proposal, but he added that making the legislation as broad as possible would ultimately help its chances.
Rep. Royce pointed to the failed State Modernization and Regulatory Transparency Act, or SMART Act, as an example of why narrowly defined bills fail to pass. SMART was unable to attract a broad enough base of support to gain any political momentum, he noted.
Sen. John Sununu, R-N.H., who originally introduced OFC legislation in the Senate along with Sen. Tim Johnson, D-S.D., said it was important that the bill provide a “good legislative framework” for debate on the federal regulation issue. Including property and casualty lines is an important part of providing that framework, he said.