NAIC Displeased With OFC Reversal

Kansas City, Mo. — National Association of Insurance Commissioners (NAIC) President and Kansas Insurance Commissioner Sandy Praeger has penned a letter in response to news that the board of trustees of the National Association of Insurance and Financial Advisors (NAIFA) voted to recommend support for the concept of the optional federal charter (OFC) for insurance.

“NAIFA has been a long-standing supporter of the NAIC and the state-based system of insurance regulation,” Praeger wrote. “So, we are certainly surprised and disappointed that NAIFA’s board would suddenly change course on this important consumer-protection issue—especially without the benefit of having the full feedback and support of its 225,000 members.

“Considering that this measure still needs to be voted on by the NAIFA membership at large—and the governing board’s decision refers to certain conditions that would need to be satisfied—we remain hopeful that NAIFA’s membership will ask its board to reconsider its position.

“The plain and simple truth is optional federal chartering would create a new federal bureaucracy from scratch and allow insurance companies to ‘opt out’ of comprehensive consumer protections and state oversight. Current OFC proposals would gut consumer protection, while outsourcing most critical regulatory functions to an industry-run self-regulatory organization.”

Source: National Association of Insurance Commissioners