Representatives for life insurers and regulators updated Senate Banking Committee members Tuesday on their current positions on federal involvement in insurance regulation.
John Pearson, president of Baltimore Life Insurance Company, Owings Mills, Md., spoke at the hearing for The American Council of Life Insurers, Washington.
Steven Goldman, commissioner of banking and insurance in New Jersey, appeared on behalf of the National Association of Insurance Commissioners, Kansas City, Mo.
Pearson, who heads an ACLI forum that represents small insurers, testified at the hearing that creating a federal insurance regulator and giving insurers the option of choosing between a state charter and a federal charter “would create a more innovative, efficient and competitive life insurance industry.”
Since the Senate Banking Committee held its last insurance regulatory hearing 2 years ago, “the case for regulatory reform has become even stronger as domestic operational concerns have been joined by pressing international regulatory and competitive issues,” Pearson said.
Goldman, who spoke for the NAIC, noted that the U.S. insurance industry has grown to generate more than $1.4 trillion in annual premiums and account for 11.9% of U.S. gross domestic product.
“Clearly, this is not an industry that has suffered under state insurance supervision,” Goldman said.
“The current U.S. insurance regulatory scheme is strong, and our track record is regarded internationally as the benchmark by which other supervisory systems are measured,” Goldman said.
The National Association of Insurance and Financial Advisors, Falls Church, Va., did not have a witness at the hearing, but it submitted a statement reporting that its board is recommending that members give conditional support to the OFC concept while continuing to support state-based regulation.
“NAIFA is a strong supporter of improving the state system through NAIC efforts such as the Interstate Compact and producer licensing reform,” NAIFA President Jeffrey Taggart says in the statement.
But the state-based system now “thwarts competition, reduces predictability and adds unnecessary expenses to the cost of doing business,” Taggart says.