Marc Racicot, former governor of Montana, and now president of the American Insurance Association, responded to points in a letter from state legislators to the National Governors Association urging governors to oppose an optional federal charter.
The letter sent by the National Conference of Insurance Legislators on Aug. 24 to the NGA notes the costs of a federal insurance bureaucracy which would be established under S. 40/H.R. 3200, the National Insurance Act of 2007. In the letter, NCOIL argues that “an OFC would set up a bifurcated regulatory system for insurance, put at risk important state revenue, nullify critical state-initiated consumer safeguards, and delay and deny important consumer access and recourse in problem times.”
The NCOIL letter also refers to recommendations in an earlier letter from the AIA and the American Council of Life Insurers, Washington, supporting an OFC as “ill-advised.”
When asked how he would review the NCOIL letter if he was still serving as a governor, Racicot says both he and Frank Keating, ACLI president and former governor of Oklahoma, have the perspective that “if it wasn’t good for the consumer, and there wasn’t a convincing case, then we wouldn’t try to be manufacturing one.
“The logic is overpowering,” Racicot continues. And bipartisan support for the bill by both Democrats and Republicans, he adds, is testimony to that logic.
Racicot says there is “an enormous effort on a global scale to eliminate trade barriers” and an OFC would help accomplish this goal.
He also notes that a dual regulatory system of banking has existed since the Civil War and has worked “exceptionally well.” In fact, it has not hurt the state banking track, with 70% of the banks still choosing a state charter, according to Racicot. “Not all companies are positioned to offer property-casualty coverage or life coverage on a broad, national basis.”
State revenue will not be threatened by provisions in the bill and states will continue to assess and collect premium taxes, he maintains.