Life-Only OFC Prospects Fading

While the overall prospects for an optional federal charter remain unclear, it appears increasingly likely that such a charter will not be limited to life insurers, according to members of Congress speaking at an event here.

“A year ago, I would have said that property-casualty is not likely to be included [in an OFC],” said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

However, he said, p-c lines have become more central to the discussion because of lawmakers affected by the hurricanes of 2005 and disputes with insurers that took place over the handling of claims.

In his remarks, Frank also said that proposals to tax the inside buildup on life insurance policies should not inspire any great fears. Although such proposals are a “hardy perennial” and appear regularly in budget proposals, he said they have no chance of being approved and are typically there to provide political cover so the person proposing it can say he tried to reduce the budget.

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.