OFC Hearings Continue on Capitol Hill

On October 30, the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises (Chairman Paul Kanjorski, D-PA), held its second in a new series of hearings on insurance regulatory reform. The title of the hearing was “Additional Perspectives on the Need for Insurance Regulatory Reform.” Because the debate over insurance regulation centers on the question of whether the Congress should create a new optional federal system of insurance regulation, the witnesses for the hearing were asked to provide feedback on the current problems with state regulation of insurance.

NAIFA is neutral on the creation of an OFC, but we provided written testimony that gives a factual account of the challenges facing the state system. Some of the key points of NAIFA’s testimony were:

NAIFA is steadfastly committed to state regulation of insurance, but we recognize that there are serious deficiencies with the system that are in need of reform.

State insurance regulators have made great efforts in the past several years to reform and modernize the system; unfortunately, their efforts have been met with limited success because it is nearly impossible to achieve consensus amongst 50 different insurance departments and 50 different state legislatures.

Unnecessary distinctions among the states and inconsistencies within the states on issues such as licensing, product approval, and consumer protection thwart competition, reduce predictability and add unnecessary expenses to the cost of doing business.

For years NAIFA has worked closely with the NAIC and supported their producer licensing reform efforts every step of the way, but we are realistic in our expectations. It is unlikely that the states can or will achieve complete producer licensing reform – or complete reform in any other area of insurance regulation.

We believe the status quo of insurance regulation is detrimental to consumers and NAIFA members and we are therefore willing to consider all regulatory reform options, including federal initiatives, to improve the regulation of insurance.

A copy of NAIFA’s press release and complete testimony is online at www.naifa.org/newsevents/releases/20071030_hfss.cfm.

Other groups providing testimony:

Anti OFC (Click on the highlighted name to access the statement)

• The Honorable Craig Eiland, Texas House of Representatives, testifying on behalf of the National Conference of Insurance Legislators
• J. Robert Hunter, director of insurance, Consumer Federation of America
• Scott Gilliam, assistant vice president & government relations officer, The Cincinnati Insurance Companies

Pro OFC (Click on the highlighted name to access the statement)

• Frank Nutter, president, Reinsurance Association of America
• Alessandro Iuppa, senior vice president, government & industry affairs, Zurich, testifying on behalf of the Financial Services Roundtable
• John W. Felton, president, Tennessee Brokerage Agency, testifying on behalf of the National Association of Independent Life Brokerage Agencies
• The Life Insurance Council (submitted a letter for the hearing record).

Moving forward, Chairman Kanjorski intends to continue to hold hearings on this issue. A date for the next hearing has not been announced.

For more information on this hearing, contact Jill Edwards at jilledwards@naifa.org or 703-770-8158.

Visit the Insurance Regulatory Reform section of NAIFA’s website at www.naifa.org/advocacy/irr.

Back to November 15, 2007, NAIFA Frontline