WASHINGTON BUREAU — Congress should think about federal regulation of life insurers as it seeks to revamp the financial services regulatory landscape, the American Council of Life Insurers says.
Frank Keating, president of the ACLI, Washington, summarizes the group’s views on regulatory reform in a letter sent to congressional leaders and Obama administration officials.
Administration officials could unveil the “principles” that will underlie their financial services regulatory reform proposals as early as next week, according to industry lobbyists.
Treasury officials are meeting today with bankers and some insurance industry officials to hear their reaction to various proposals, the lobbyists report.
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Insurance industry trade group representatives are scheduled to participate Thursday “in a listening session” with the White House officials who are coordinating efforts to draft the regulatory reform proposals, the lobbyists say.
Keating says it is the ACLI’s “strong belief” that a provision giving insurers the option to choose between state and federal regulation must be included in reform efforts, to assure that the resulting regulatory structure operates effectively with respect to all segments of the U.S. financial services industry.”
The claim that an “optional federal charter provision” would lead insurers to engage in regulatory arbitrage “is without merit,” and is being made primarily by state regulators, Keating says.
The “life insurance business is not seeking, nor would this Congress ever consider enacting, a federal insurance regulatory system that is weak in terms of consumer protections and solvency oversight,” Keating writes. “Indeed, the ACLI has consistently advocated for a federal alternative that is as strong as, if not stronger than, the best state regulatory system.”
Today, insurers’ ability to “redomesticate” from one state to another already create opportunities for regulatory arbitrage, Keating writes.
Most life insurers would likely choose a federal charter, if given the option, Keating predicts.