Leaders of two large insurance trade groups are asking the National Governors Association to reconsider its opposition to giving insurers a choice between federal and state regulation.
Frank Keating, president of the American Council of Life Insurers, and Marc Racicot, president of the American Insurance Association, write in the letter that an “optional federal charter” program would make U.S. insurers more competitive and continue to permit states to collect premium taxes.
Both Republicans, Keating is a former governor of Oklahoma, while Racicot is a former governor of Montana.
They sent their letter to Janet Napolitano, a Democrat, who is chairman of the NGA, Washington, and governor of Arizona.
In October 2006, the NGA and the National Conference of State Legislators, Denver, came out with a letter opposing the OFC bill then under consideration in Congress. Leaders of the NGA and the NCSL said an OFC bill would create “a massive new federal bureaucracy in Washington” and permit insurers to opt out of comprehensive state oversight.
Keating and Racicot are asking the NGA to take another look at the OFC concept.
“The success of the insurance industry, a major revenue producer for state governments, depends on the existence of a modern and efficient regulatory system that reacts quickly to rapid changes in the marketplace and provides efficiencies and convenience to customers,” Keating and Racicot write.
States have made some progress at streamlining insurance regulation, but that progress has come about too slowly, Keating and Racicot contend.
Creating an optional federal charter would “encourage states to achieve long-delayed uniformity and thus make state charters an attractive alternative to a federal charter,” Keating and Racicot predict.