Life producer groups today had a national stage for discussing whether insurers and agents should get to choose between state regulation and regulation by a new federal agency.
John Felton IV, Chairman of the National Association of Independent Life Brokerage Agencies, Fairfax, Va., testified before a hearing of the capital markets subcommittee of the House Financial Services Committee that NAILBA believes an “optional federal charter” approach would give consumers quicker access to a wider variety of products that would better meet their needs.
“The reduction of costs associated with working with one regulator, not 50, would be reflected in the pricing of products,” Felton testified, according to a written version of his remarks.
“This would have the effect of reducing costs to the consumer, providing consistent agent licensing standards and continuing education requirements,” Felton said.
In addition, centralized control of agent status through a national database would give consumers a higher level of confidence in insurance industry representatives, Felton said.
Establishing federal regulation of insurance also would help give the insurance equal standing with other financial services industries, Felton testified.
The National Association Insurance and Financial Advisors, Arlington, Va., which did not get to send a witness to the hearing, released a statement of its own saying that NAIFA embraces federal initiatives to improve the regulation of insurance.
NAIFA remains “open to considering any and all regulatory options that will allow our members to better serve their clients,” NAIFA President Jeffrey Taggart says in the statement.
“Simply put, NAIFA favors reform, improvement and progress over the status quo,” Taggart says.
Any regulatory structure “that is responsive to the increasingly mobile and fast paced marketplace in which our members do business” would be supported by NAIFA, Taggart says.
NAIFA members are “long-time supporters of state regulation and remain steadfastly committed to this tradition,” Taggart says.
But Taggart says there are “serious deficiencies” in the state insurance regulatory system.
“Reform is critical to protect consumers and ensure a strong and healthy insurance marketplace,” Taggart says.
Taggart cited the new Interstate Insurance Product Regulation Compact as an example.
The compact, which has created a single office that handles product and form approvals for many different states, “is an undisputed success for the states,” Taggart says.
But the compact has been enacted in only 30 states to date, and the likelihood that it will be enacted in all 50 states is very slim, Taggart says.
Although NAIFA’s regulatory reform policy continues “our century-long support for state regulation of insurance and confirms our commitment to improve the state-based system, we believe the status quo of insurance regulation is detrimental to consumers and NAIFA members,” Taggart says. “Thus, our policy acknowledges that all regulatory reform options are on the table and that NAIFA is willing to consider a breadth of alternatives in our desire to fix the problems confronting us.”