WASHINGTON BUREAU — Life industry trade groups today told key members of Congress that they would support “responsibly crafted” optional federal charter legislation.
The legislation should include support for continued “viable state regulation,” the groups write in a joint letter.
The groups signing the letter include the American Council of Life Insurers, Washington; the National Association of Insurance and Financial Advisors, Falls Church, Va.; the National Association of Independent Life Brokerage Agencies, Fairfax, Va.; the Life Insurers Council, Atlanta; and the National Fraternal Congress of America, Oak Brook, Ill.
Advocates of the OFC concept want Congress to give insurers a choice between sticking with the traditional state-run insurance regulatory system and coming under the jurisdiction of a new federal insurance regulatory system.
“Life insurance carriers of all sizes and structures (large, small, stock, mutual, fraternal) as well as life insurance agents and brokers are united in calling for the concept of an efficient and effective optional federal regulator,” the groups say in the letter.
Because life insurers hold more than $5 trillion in assets and are the single largest source of corporate bond financing in the United States, “the life insurance industry is systemically significant to the American economy,” the groups write.
The groups say an OFC system would streamline consumer protection; establish a federal authority to represent the U.S. insurance and reinsurance industries in international negotiations; and reduce regulatory inefficiency.
Agents for Change, a group that represents both life and property-casualty producers, sent a letter of its own asking key members for creation of a national insurance charter.
“As you know, the financial services industry includes banking, security and insurance products, and excluding insurance – and the agents and brokers who serve as a direct link to consumers – from reform would be a mistake,” the group says.
“Having the choice of opting into a national regulatory system, in a country which has become increasingly mobile, will allow producers to best serve their customers,” Agents for Change says.
The groups sent the letters as the House Financial Services Committee capital markets subcommittee was gearing up for a hearing Tuesday on “Systemic Risk and Insurance, and as the Obama administration was preparing to release a regulatory reform plan.