Key life insurance trade groups voiced different opinions last week on whether Congress should pass legislation creating an optional federal charter for insurers.
The differences between the two groups, the National Association of Independent Life Brokerage Agencies and the National Association of Insurance and Financial Advisors, were aired in testimony before the Capital Markets Subcommittee of the House Financial Services Committee on Oct. 30.
At the same hearing, a consumer advocate was highly critical of state insurance regulation.
In his testimony before the panel, John W. Felton IV, chairman of NAILBA and president of the Tennessee Brokerage Agency, said NAILBA believes an OFC approach would provide consumers with increased access to competitive and market reflective products more quickly.
“The reduction of costs associated with working with one regulator, not fifty, would be reflected in the pricing of products,” Felton said. “This would have the effect of reducing costs to the consumer, providing consistent agent licensing standards and continuing education requirements.”
But, in a statement issued as the panel began the hearing, Jeffrey J. Taggart, president of NAIFA, said the trade group remains “open to considering any and all regulatory options that will allow our members to better serve their clients.”
As a result, he said, the NAIFA policy embraces federal initiatives to improve the regulation of insurance. “Simply put, NAIFA favors reform, improvement and progress over the status quo,” he concluded.
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 said.
In his testimony, NAILBA’s Fenton said that centralized control of agent status through a national database would provide consumers with a higher level of confidence in those who represent the insurance industry.
Additionally, he said, NAILBA supports federal regulation of insurance that would put the insurance industry on equal standing with other financial services industries.
“Currently, the insurance industry does not have a central office to voice concerns or attempt to improve industry practices/standards in an efficient manner throughout the entire fifty states,” Felton testified. “This centralized system will also provide further protections for the consumer. Fraudulent producers must be prevented from illegal actions against multiple companies and consumers by moving from state to state.
“A national system would be a positive step to deter such occurrences,” Felton said.