WASHINGTON BUREAU — Insurance agents and brokers who support creation of a federal insurance charter say predictions that a federal charter would reduce state premium tax revenue are misleading.
Agents for Change, Washington, a group that represents pro-federal charter producers, has issued a statement criticizing an anti-federal charter letter that the National Conference of Insurance Legislators (NCOIL), Troy, N.Y., sent to Congress Jan. 5.
NCOIL officials warned that letting insurers choose between the current, state-based 
regulatory system and a new federal insurance regulatory system could cost states $16 billion in annual insurance premium tax revenue.
Peter Ludgin, executive director of Agents for Change, says the "optional federal charter" (OFC) bills introduced in the last three sessions of Congress clearly specified that states would continue to collect premium taxes if the proposals were adopted.
In the last Congress, he says, the federal charter bill introduced in the House states that a national insurer and a national insurance agency "shall not be exempt from any State tax or subject to a lesser burden of any State tax, solely by reason of its status as a national insurer under this Act."
"NCOIL should acknowledge that
premium taxes will not be diminished under an OFC," Ludgin says.
"State insurance legislators should act in the best interest of their constituents by supporting open markets, choice, and competition in the insurance marketplace," Ludgin adds. "They should not use their false fear of revenue loss to cloak their trepidation of losing sole control of regulatory oversight."
No one can dispute that the current mandatory, state-based system acts as a barrier to entry, limits insurance portability, and implements price controls, Ludgin says.
"An OFC will provide better, efficient, modern, and consistent regulation across all states for all consumers," he says.
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