The National Association of Professional Insurance Agents and Agents for Change already are sparring over the new optional federal charter push.
Reps. Melissa Bean, D-Ill., and Ed Royce, R-Calif., say they are preparing to introduce the National Insurance Consumer Protection and Regulatory Modernization Act, a bill that would give insurers the option of choosing to take a federal charter and come under the jurisdiction of a new federal insurance regulatory agency.
The National Association of Professional Insurance Agents, Alexandria, Va., says the OFC efforts threaten to “dismantle the successful state insurance regulatory system.”
“This bill is just more of the same,” says Kenneth Auerbach, national president of the PIA.
The bill is adding “perfume and lipstick” to a “tired, old proposal that its backers have tried and failed to advance for many years,” Auerbach says. “It is still a bad idea.”
Peter Ludgin, executive director for Agents for Change, Washington, which represents both property-casualty and life insurance agents who support federal regulation, is welcoming the bill, saying it is forcing opponents of federal regulation to “scramble.”
Ludgin says opponents of federal regulation are using “their same old tired talking points, developed years ago,” and “are not adding anything constructive to a real policy debate in light of the current crisis.”
The state regulatory system worked well in the 19th century, but “interest groups who think the insurance regulatory system should not be reformed to reflect the needs of 21st century consumers are missing the mark,” Ludgin says.
The Bean-Royce bill would establish a national system of regulation and supervision for nationally registered insurers, agencies, and producers. States would keep responsibility for regulating state licensed insurers, agencies and producers.
The bill also calls establishing federal insurance offices be set up in all 50 states.
Auerbach notes that there are two new provisions in the latest OFC bill. One new element is that it the bill would take “affirmative steps to begin to dismantle the state insurance regulatory system” by “providing authorization for the formation of a separate guaranty fund for federally regulated insurers,” he says.
“Congress and the administration cannot afford to take their collective eyes off the ball with a bill like this,” Auerbach says.
The focus of Congress “must remain on correcting the failures in the federal regulatory system that led to our current financial crisis,” Auerbach says. “Deregulating insurance does not accomplish this task.”
Ludgin of Agents for Change says opponents of the OFC bill are wrong for “criticizing legislators for moving this debate forward.”
The criticism “is counterproductive to our shared goal of more efficient and effective regulation,” Ludgin says. “Insurance regulation reform will happen; this train is pulling out of the station.”