Lawmakers have kicked off a new round of efforts to give insurers, agents and brokers the ability to choose between state and federal regulation and supervision.
Sens. Tim Johnson, D-S.D., and John Sununu, R-N.H., today introduced a bill in the Senate that would create the National Insurance Act of 2007.
The “optional federal charter” bill, which does not yet have a bill number, is a new version of a bill that Johnson and Sununu introduced during the 109th session of Congress.
The bill would:
- Create an independent Office of National Insurance within the Treasury Department that would resemble the federal agencies that now regulate national banks and thrifts. The commissioner of the ONI would be appointed by the president for a 5-year term subject to Senate confirmation.
- Let states keep responsibility for regulating state-licensed insurers and producers.
- Authorize the chartering of separate life and property-casualty insurers.
- Establish a holding company structure that could provide an umbrella for separate life and p-c insurance subsidiaries.
- Authorize the chartering and licensing of national insurance agencies and the licensing of federal insurance producers. A national agency could sell insurance for any federally chartered or state-licensed insurer, and a federally licensed insurance producer could sell insurance in any state on behalf of any national insurer or state insurer.
- Allow a state-licensed insurance producer to sell insurance on behalf of any insurer, including national insurers, operating within the state in which the producer holds a license.
- Direct the insurance commissioner to establish regulations barring unfair trade and claims practices.
- Permit federally licensed insurance producers to sell health insurance offered by state health insurers.
- Exempt federally chartered insurers and agencies and federally licensed producers from Federal Trade Commission antitrust and unfair trade practices oversight.
The American Council of Life Insurers, Washington, has put out a statement welcoming the effort to reduce inconsistencies in insurance laws and regulations and calling for the creation of strong, national consumer protection rules.
“Why should policyholders facing similar risks and needs living in neighboring states not have the same policy choices and benefits?” asks ACLI President Frank Keating.
The National Association of Insurance and Financial Advisors, Falls Church, Va., says its policy is to support efforts at the state or federal levels that will improve the insurance regulatory system.
“Regulatory reforms are needed in areas such as agent licensing and speed to market of insurance products,” NAIFA says in a statement. “NAIFA will study this legislation and continue to work with its industry partners as well as state regulators and Congress to ensure a regulatory environment that allows agents and advisors to meet the needs of consumers.”
Robert Poli, chairman of Agents for Change, Washington, a group of life and property-casualty agents who support OFC efforts, says creating an optional federal charter will help producers offer better customer service.
“Consumers are frustrated with the lack of choice among insurance products and coverage in the current system,” Poli says. “They don’t understand why I cannot continue to serve them – many of my customers view me as a trusted financial advisor – if they move to a state where I am not licensed. Similarly, they do not understand why I can sell a product in one state but not another.”
Ken Cohen, associate general counsel at Massachusetts Mutual Life Insurance Company, Springfield, Mass., also says an OFC system could help consumers as well as the insurance industry.
“Insurance companies and agents would enjoy streamlined licensing procedures and save significant costs on related administrative issues,” Cohen says. “In turn, consumers would have greater and more timely access to a wider range of products, and would receive uniform consumer protection regardless of where they live.”