Advocacy Update: November 21, 2007
NAIFA Tells Treasury Department Views on Insurance Regulatory Reform
In response to an invitation from the U.S. Department of Treasury, NAIFA today conveyed in a formal statement its views on the need to address numerous deficiencies in the current system of insurance regulation. The Treasury Department has been part of the debate on insurance regulatory issues dating from the 1970s because of the potential parallel between federal regulation of banking and the possibility of similar regulation of the insurance industry. National Banks are regulated from the office of the Comptroller of the Currency which is physically part of the U.S. Treasury Department. Legislation (usually called Optional Federal Charter or OFC) pending in Congress (H.R. 3200 and S. 40) would give insurance companies and agents the option of electing federal regulation or sticking with the current state system. The bills place the location of an insurance regulatory mechanism inside the U.S. Treasury Department.
As expressed by NAIFA President Jeffrey J. Taggart, CLU, ChFC, LUTCF, NAIFA’s comments emphasized that despite recent solid efforts made by the states to improve the current regulatory system, it has become increasingly clear that the state system needs help in taking more positive steps. NAIFA told the Treasury Department that it is imperative that the problems and inefficiencies in the state regulatory system be corrected quickly--going so far as supporting the active involvement of the federal government in the reform process.
Surveys show that NAIFA members are divided over the creation of optional federal charter. However, NAIFA has been very active at the state level on working to improve regulation in the areas of speed-to-market of life insurance, annuities, long-term care and disability income products as well as easing the licensing burdens for NAIFA members who do business in multiple states.
For a copy of NAIFA’s statement, go to www.naifa.org/advocacy/documents/treasury_11212007.pdf