The National Association of Insurance and Financial Advisors last week made it unanimous for life insurance industry trade groups in support of legislation creating an optional federal charter.
A resolution giving conditional support to an OFC was passed by voice vote at the NAIFA’s annual meeting here on Sept. 10.
The American Council of Life Insurers later in the day issued a statement lauding NAIFA for its decision.
Frank Keating, president and CEO of ACLI, said, “We are happy to see our partners in the life insurance industry–NAIFA–formally endorse optional federal charter legislation, subject to certain reasonable conditions that ACLI supports.
“NAIFA’s support for a well-crafted OFC system shows that all segments of the life insurance industry–companies and producers; large businesses and small–recognize the need to modernize insurance regulation,” Keating said.
According to two industry lobbyists who declined to be named, the decision makes the life industry unified in support of an OFC and isolates the remaining opposition to some property-casualty insurance companies and property-casualty agents.
The lobbyists said the decision was a victory for the ACLI, a strong advocate for an OFC, and for the life/p-c coalition that supports an OFC. Specifically, these include “Forum 500″ members, a subgroup of smaller ACLI members; the Association for Advanced Life Underwriting and the National Association of Independent Life Brokerage Agencies.
“No one can say the life insurance industry is divided on the issue of OFC,” one of the lobbyists said.
The decision comes as action is expected in the House this week under expedited processes for legislation, on H.R. 5840, the Insurance Information Act of 2008. This bill would create an office within the Treasury Department that would assemble data for federal agencies on insurance regulatory activities, and have the authority to negotiate trade pacts involving insurance with foreign countries.
NAIFA completed the process of supporting such legislation when its National Council approved the resolution. Approximately 80% of the National Council members attending the meeting supported the resolution, according to one attendee.
“Today we have seen democracy in action,” said Elaine J. Fremling, CLU, chairman of NAIFA’s Policy Formation Subcommittee, after the vote. “This is the first time in our history that a NAIFA policy position has been sent to the National Council for their ratification.”
Under the resolution, NAIFA will support the “concept of an OFC for insurance, provided it meets several conditions, including the ability of agents to remain state-licensed if they desire, enhanced consumer protections, preservation of state regulation and the establishment of a single federal entity with expertise in insurance matters.
At the same time, NAIFA officials said they will continue to work with state commissioners and legislators to craft and, when possible, enact meaningful reforms to the regulatory system.
Incoming NAIFA President Cliff Wilson cited such initiatives as working with the NAIC to create and, when possible, implement the Producer Licensing Model Act, the National Insurance Producer Registry, the Suitability in Annuity Transactions Model Act and the Interstate Compact.
“We have no plans to abandon our support for these important initiatives. The vote today allows NAIFA to pursue a dual state and federal track approach to achieving regulatory reform,” Wilson said.
“As insurance regulatory reform discussions are taking place at the state level, the halls of Congress, and the Administration, NAIFA must be there to provide the critical insight of our members,” he said.
NAIFA’s National Council is made up of the presidents and national committee members of local and state associations.
In his statement, Keating offered reassurances that state regulators would still play a key role in overseeing insurance companies if an OFC is created. “OFC will not supplant state regulation; rather, it will offer an alternative,” he said.
“Companies and producers will choose which system best suits their business models and, more importantly, their customers,” he said. “The ideal situation will be to have two strong and professional regulatory options that emphasize consumer protection and efficiency.”
Clearly realizing that the NAIFA action was a strong step forward in the effort to create an OFC, Keating added that, “As I look back over the years, I am gratified at the tremendous consensus that has developed around the OFC concept.
“OFC has the support of life insurance agents, brokers, companies large and small, members of Congress from both parties and financial analysts who say OFC is vital to maintaining America’s global leadership in financial services.”
He also noted that, earlier this year, “the United States Treasury Department added its voice of support. We hope the new 111th Congress will move forward with OFC legislation as early as possible next year.”