OFC Debated in Senate

Washington — The issue of an optional federal charter (OFC) for insurers was examined anew in hearings before the Senate Banking Committee.

Not surprisingly, witnesses included both proponents and opponents of an OFC.

“Product standards, capital requirements, consumer protections—indeed every aspect of our business—need not and should not vary from one state to another,” testified John Pearson, chairman, president and CEO of Baltimore Life Insurance Co., who was speaking on behalf of the American Council of Life Insurers. “Yet we operate under a system in which companies must navigate a multiplicity of different regulatory gauntlets in parallel, each subject to its own timetable, in order to operate nationally, regionally or even in just a handful of jurisdictions.”

Those testifying against an OFC included representatives for agents and brokers, regulators and consumer organizations.

“Consumer organizations strongly oppose an optional federal charter that allows the
regulated company, at its sole discretion, to pick its regulator,” said Travis Plunkett, legislative director for the Consumer Federation of America. “This is a prescription for
regulatory arbitrage that can only undermine needed consumer protections.”

Source: Senate Banking Committee