Federal Insurance Department
Agents For Change
There is movement to enact an optional federal charter (OFC) to allow producers the option of being regulated at either the federal or the state level. Insurance is currently regulated at the state level.At the forefront of this change is the
“Agents for Change?” Trade Association. This is a consortium of insurance agents and brokers from across all lines of insurance working together to reform insurance regulation and enact an optional federal charter (OFC) to allow producers the option of being regulated at either the federal or the state level. Members of Agents for Change participate in policy development and provide public policy makers with expert advice as they move forward to modernize insurance regulation.
“Agents for Change” Trade Association advocates that there are distinct advantages for agents and brokers within the framework of an OFC. These include: (1) time spent on licensing issues would be greatly diminished; (2) speed to market of products would be greatly enhanced; (3) consumers would have more products at more competitive rates from which to choose; and (4) the ability to better serve customers no matter where they may reside. Insurers would be able to bring their products to market more quickly because they would only have to obtain approval from a single regulatory body, rather than in multiple states as they do now under the patchwork quilt of state regulation. And consumers, who often move from state to state in today’s economy, would benefit from more stable insurance premiums and consistent administration and regulation of their insurance policies. Insurance producers currently carry an average of 7.9 separate licenses per producer. A recent study conducted by researchers at Temple University revealed that the estimated cost of the current system of producer licensing is $431,733,400 with an assumed cost per license of $100. Under the National Insurance Act-NIA (Introduced in 2007 by Senators John Sununu (R-NH) and Tim Johnson (D-SD), savings could range from $268 to $377 million per year in licensing fees alone as a single license would be required. These savings would be passed along to consumers.
Developments:
- The Independent Insurance Agents & Brokers of America
does not necessary agree with a proposal to establish an Optional Federal Charter –OFC for insurance regulation, but continues to support the proposed State Modernization and Regulatory Transparency (SMART) Act legislation. More information on
SMART.The National Association of Mutual Insurance Companies -NAMIC announced its strong opposition to the federal regulation of the property/casualty insurance industry under the so-called "optional federal charter" proposal.The National Association of Insurance Commissioners indicated its opposition to the bill, predicting that the bill will result in policyholder confusion, market uncertainty, and a host of other unintended consequences.On the other hand, the American Council of Life Insurers –ACLI and Computer Sciences Corporation – CSC recently released a study that found a clear economic case for structural changes in insurance regulation that will benefit both consumers and life insurers.On September 28th, 2006 the American Bankers Insurance Association and the American Bankers Association commended Rep. Ed Royce (R-CA) for introducing legislation that would enable insurers to offer products and services that best suit their customers’ needs. Rep. Royce’s legislation joins a similar measure already introduced in the Senate by Sen. John Sununu (R-NH) and Sen. Tim Johnson (D-SD).Also on September 28, 2006 –The National Association of Insurance and Financial Advisors- NAIFA welcomed the action taken by Rep. Ed Royce (R-Calif.) NAFIA stated that that the bill will bring greater attention to the need for reforms in the insurance regulatory system. Review The National Insurance Act of 2007
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