Bipartisan Optional Federal Charter Legislation Introduced in House

Legislation to create an optional federal insurance charter for the life and property casualty lines of business has been introduced in the U.S. House of Representatives. Reps. Ed Royce (R-CA) and Melissa Bean (D-IL), both members of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, which has jurisdiction over insurance, introduced the National Insurance Act of 2007 (H.R.3200) on July 25.

Subcommittee Chairman Paul Kanjorski (D-PA) has already said publicly that he supports the creation of an OFC for life companies and their agents. He is still studying whether he will support an OFC for property/casualty insurance. Chairman Kanjorski is planning to introduce his own version of OFC legislation later this year and is also preparing to hold a series of hearings on OFC this Congress.

The Royce/Bean bill appears to be identical to legislation introduced in May of this year by Senators Tim Johnson (D-SD) and John Sununu (R-NH). Senators Johnson and Sununu are members of the Senate Banking Committee that, like the House Financial Services Committee, has jurisdiction over insurance.

Both the House and Senate bills were originally introduced last Congress but some of the provisions were changed with their reintroduction this year (Note: Rep. Bean is a new sponsor this Congress). The current House and Senate versions allow insurance agents the flexibility to choose to be regulated at the federal or state level for all lines of their business, but makes clear that health products will remain regulated by the states. In addition, both bills require that any agent-related regulations do not conflict with any SEC SRO rules (including but not limited to NASD rules).

State Activity
During the recent summer meeting of the National Conference of Insurance Legislators (NCOIL), members of the NCOIL Executive Committee signed a letter to Senators Johnson and Sununu reiterating their opposition to the creation of an optional federal charter.

In addition, the NCOIL Executive Committee adopted a resolution opposing federal efforts (S.618 and H.R.1081) to repeal the limited insurance antitrust exemption under the 1945 McCarran Ferguson Act. NAIFA is still studying the issue of optional federal charter but is fiercely lobbying Congress to oppose S.618 and H.R 1081. A Senate Judiciary Committee markup of S.618 is expected after Congress returns from its August recess.

For more information on Optional Federal Charter and the McCarran Ferguson repeal efforts, please visit the Insurance Regulatory Reform section of NAIFA’s website at www.naifa.org/advocacy/irr.

Back to August 1, 2007, NAIFA Frontline