Lawmakers Give OFC Bill Details

Regarding consumer protections, the new bill would implement market conduct model laws developed by the National Association of Insurance Commissioners, Kansas City, Mo.

The bill also calls for providing a single telephone number that consumers with complaints or inquiries could call to locate the appropriate federal or state insurance regulator.

The bill would mandate that “there is a physical office of the Office of National Insurance in every state either through the Office of the Ombudsman or the Division of Consumer Affairs,” and the bill would require national insurers and agencies to have a consumer liaison that would work with the Division of Consumer affairs to expedite handling of consumer complaints.

States could still assess premium taxes on nationally chartered entities.

“If a state guaranty association does not provide policyholders a level of protection equivalent to the NAIC Model standards, a national guaranty corporation would be created for national insurers,” according to the bill outline.

“In advancing this legislation, we believe we can provide a more effective regulatory regime over insurance that will enhance consumer protections, ensure our capital markets are protected from systemic threats within the insurance sector, and address many of the problems that have resulted from the fragmented state-based system,” Bean and Rice say.

The American Council of Life Insurers, Washington, has issued a statement welcoming the introduction of the legislation.

“Without a national insurance office, there is a gaping hole in federal oversight of the financial markets,” ACLI President Frank Keating says. “While we cannot comment on the substance of the legislation until it is released, ACLI supports establishing an optional federal presence. Optional federal regulation’ is not a euphemism for ‘no regulation.’ To the contrary, especially in the wake of the financial crisis, financial markets will not have confidence in insurance companies that come under less-than-rigorous financial standards. A national insurance regulatory option would allow insurance companies to operate under the system the best matches their customer base. The key is to close the gaps in federal financial oversight, establish the highest levels of consumer protection at both the state and federal levels and modernize and streamline the system.”