Giving life insurers the ability to choose between state and federal regulation could cut insurers’ regulatory costs by about $5.7 billion per year, according to an analysis published by the American Council of Life Insurers.
Steven Pottier, a University of Georgia insurance scholar, developed that OFC savings estimate for the ACLI, Washington.
An OFC system also would increase the efficiency of national life insurers, Pottier predicts.
Sen. John Sununu, R-N.H., and Tim Johnson, D-S.D., recently drew new attention to OFC proposals by reintroducing an OFC bill in the Senate.
Sununu and Johnson also introduced an OFC bill during the last Congress.
Pottier says simply eliminating the current duplication of insurance compliance costs, such as licensing fees, could save $5.7 billion.
The Johnson-Sununu bill would not directly affect state premium taxes, and the $5.7 billions savings estimate does not include any projected reductions in premium tax revenue, Pottier says.
The $5.7 billion savings estimate also excludes any benefits that might occur if a federal charter option increased the level of competition or helped insurers get new products to market more quickly, Pottier says.