Reps. Melissa Bean and Ed Royce have introduced a bill that could give insurers, agents and brokers the option to choose between state regulation and federal regulation.
Bean, D-Ill, and Royce-R-Calif., say the leaders of the House Financial Services Committee have agreed to hold hearings on the bill soon.
The bill, the National Insurance Act of 2007, does not yet have a bill number.
Members of the Senate introduced a similar optional federal charter bill in the Senate in May.
Bean and Royce say they hope creating an OFC system will help U.S. insurers overcome the current trade deficit in the insurance services market.
In 2006, the United States paid $24 billion more to international insurers than international customers paid to U.S. insurers, Bean and Royce note.
Both at home and abroad, “regulatory obstacles currently discourage insurance innovation and nimble product development to capitalize on emerging growth markets,” Bean says.
The Bean-Royce bill would:
- Create a federal system of regulation and supervision for insurers as well as for agents and brokers.
- Free both insurers and producers to elect federal or state regulation, charters and licenses.
- Give states responsibility for regulating state-licensed insurers and producers.
- Allow federally licensed insurance producers to sell health insurance offered by state-regulated health insurers.
- Direct the national insurance commissioner to establish regulations barring unfair trade and claims practices.
- Require a national insurer, as a general rule, to belong to the state guaranty association in each state in which it sells insurance.
- Join a new national guaranty company, the National Insurance Guaranty Corp., to protect consumers in states in which the state guaranty association does not meet the standards established by the National Association of Insurance Commissioners, Kansas City, Mo. The guaranty company would get the cash needed to make good on the guarantees by imposing assessments on member companies.
The American Council of Life Insurers, Washington, one of 11 major financial services groups supporting the Bean-Royce bill, put out a statement predicting that passage of the bill would modernize the U.S. insurance regulatory system.
“ACLI supports language in the bill assuring that nationally-regulated insurers offer the best consumer protections in the nation,” ACLI President Frank Keating says in the statement. “The legislation should take a ‘best practices’ approach, combining well-tested ideas from around the nation into a single coordinated and efficient system.”