Washington — Insurance industry associations are obliging to a request for comments by the U.S. Treasury Department as it conducts a review of the regulatory structure associated with financial institutions. Several associations used the opportunity to reiterate their opposition to the creation of the optional federal charter (OFC) for the insurance industry. Senators Tim Johnson, D-N.D. and John Sununu, R-N.H., introduced the National Insurance Act of 2007 into the upper house in May.
In a letter, Robert Rusbuldt, president and CEO, and Charles Symington, Jr. senior VP, government affairs and federal relations, for the Independent Insurance Agents & Brokers of America, wrote that the charter would create more problems than it would solve.
"Current OFC proposals would create an entirely new, completely redundant and inefficient federal regulatory layer," the letter states. "Rather than duplicate the current state-based system, the more efficient solution would be to enhance its strengths, correct its weaknesses and modernize it."
Indeed, the letter acknowledges that the current state insurance regulatory system is "not without its share of problems."
"The system is rightly characterized as slow and inefficient in certain areas with differing laws and regulations that add unnecessary expense," it states. "As a result, we believe limited federal legislative action is necessary to help reform the insurance regulatory system."
Likewise, the National Association of Mutual Insurance Companies (NAMIC) tempered its opposition to an optional federal charter with a call to improve the existing state-based regulatory environment.
"From a property and casualty insurance industry perspective, the key regulatory problem continues to be an over reliance on outdated and inefficient price and form regulation," Charles Chamness, NAMIC's president and CEO wrote in a statement. "Current inefficiencies in the insurance marketplace are driven by excessive rate and form regulation, which hamper competitive pricing, inhibit product and service innovation and delay product delivery."
Sources: Independent Insurance Agents & Brokers of America, NAMIC
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