Ever since Gramm-Leach-Bliley passed in November 1999, momentum has been building to reform the state-based insurance regulatory system. The landmark legislation, which allows banks, insurers and brokerages to merge and compete with one another, also ordered the states to enact uniform producer licensing laws by November 2002 (see "Here Come The Feds, May 2001).Yet, although the law mandates uniform producer licensing, it essentially left the rest of insurance regulation to the states. And, according to many in the industry, the state-based system puts insurers at a disadvantage-especially when they're trying to compete nationally with banks and brokerages.

Nationwide Financial Services Inc., for example, offers a modified guaranteed annuity, which is registered with the U.S. Securities and Exchange Commission. The product is designed to compete with bond funds offered by mutual fund companies, according to Joseph J. Gasper, president and COO of the Columbus, Ohio-based company.

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