Supporters of an optional federal charter (OFC) for insurers are taking exception to a New York Times editorial, which charged that an OFC would engender regulatory arbitrage.
The May 21 editorial, titled Regulator Shopping, argued that “cooler heads in Congress and the Obama administration should stop the optional federal charter — and all forms of regulatory shopping — in their tracks.”
In a letter to the paper, the sponsors of The National Insurance Consumer Protection Act (H.R. 1880), Rep. Melissa Bean and (D. –Ill.) and Rep. Ed Royce (R- Calif.) the editorial parroted “talking points from the bill’s opponents, who are largely bureaucrats protecting their turf at the expense of consumers and our economy.”
Bean and Royce disputed the notion that a federal charter would enable insurers to seek the regulatory path of least resistance by switching back and forth between state and federal regulators.
“We disagree with your characterization of our legislation,” the letter states. Our legislation lays out an onerous process for any insurance company trying to switch its charter back to the state system.”
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