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April 05, 2008 at 08:00 PM
Most life insurance trade groups are voicing strong support for the Treasury Department’s call for an optional federal charter in its blueprint for reform of financial services regulation.
“The optional federal insurance charter initiative took a dramatic leap forward as Treasury Secretary Henry Paulson included a recommendation in the blueprint for financial services reform to create an Office of National Insurance (ONI) within the Treasury Department,” said American Council of Life Insurers President Frank Keating.
“The proposal for change comes at a propitious time,” Keating said. “Congress will soon examine the causes behind the recent market turbulence and restart its review of insurance regulation reform legislation.”
The first hearing on the Treasury blueprint is likely to be held by the Capital Markets Subcommittee of the House Financial Services Committee April 16, according to industry sources.
In his statement, Keating said the ACLI “will stress the compelling case for an OFC and its importance to life insurers and their customers.”
He said the need “for an OFC is clear-and well documented.” For example, Keating said, “numerous studies conducted for ACLI point to lower premiums for consumers as a result of the creation of an optional federal charter.”
He said that in one study alone, improved efficiencies could yield up to $5.7 billion in savings. “ACLI is dedicated to improved efficiencies at the state level as well, so that these same benefits will be realized for consumers of companies that choose to remain state regulated,” he said.
Doug Mishkin, chairman of the National Association of Independent Life Brokerage Agencies, said the group has “long supported federal regulation of insurance that would put the insurance industry on equal standing with other financial services industries.”
