The president of the American Council of Life Insurance is disagreeing with a consumer group’s assertion that creating an optional federal charter would “federally deregulate insurance.”
The group, Consumer Watchdog, Sacramento, Calif., has sent Treasury Secretary Timothy Geithner a letter in an effort to persuade not to use creation of an Office of Insurance Information within the Treasury Department as a “stalking horse” for setting up an optional federal charter system.
Advocates of the OFC approach want to give insurers the option of choosing between a traditional state charter and a new federal charter. Holders of the federal charter would come under the jurisdiction of a new federal regulatory agency.
Consumer Watchdog sent its letter in reaction to a letter by Reps. Melissa Bean, D-Ill., and Ed Royce, R-Calif. Bean and Royce asked Jan. 23 that the Treasury Department unilaterally establish an OII as an “interim step” toward creating some form of federal insurance regulation.
The federal government must develop an insurance regulatory presence with the capacity to monitor the insurance marketplace and identify risks to consumers, the industry and the broader financial system before they reach the “crisis stage,” ACLI President Frank Keating says in a response to the letter.
“Life insurance is a $5 trillion industry which affects the lives of almost all Americans and closely interacts with banks and securities firms,” Keating says. “Consumers cannot afford a regulatory structure in which federal financial regulators are effectively walled-off from overseeing the insurance marketplace.”