- New: House Subcommittee Holds Hearing on Options for Insurance Regulatory Reform
- New: NAIFA Board Recommends Conditional Support for Optional Federal Charter
Send your comments on this issue to RegReform@naifa.org
Insurance regulatory reform is an important issue among regulators, legislators, consumer activists, and insurance carriers and agents. They agree that high, uniformed standards are needed to protect consumers’ interests and provide a regulatory environment that allows insurance companies and agents to best serve the public.
While there is consensus on the need for reform, there are various approaches in place and being considered to bring about improvements to the regulatory system.
NAIFA members have an enormous stake in regulatory progress. With insurance regulated primarily at the state level, standards for producer licensing, market conduct examinations, and product approval can vary from state to state. NAIFA members who do business in more than one state, for example, then must keep up with and meet varying continuing education requirements in each jurisdiction; each state might have different standards and processes in place to approve products, meaning that a new product you sold to a client in one state may not be available to a customer in another state for as long as two years. Multiple requirements often mean agents spend more time in their offices filling out forms when they could be out serving clients.
NAIFA Position
NAIFA supports insurance regulatory reform and modernization that helps American families and businesses achieve financial security. Such proposals should promote consumer protection, streamline agent licensing, improve product speed to market, improve the competitiveness of the insurance industry, and lower costs.
- We are very interested in hearing your thoughts on the issue of insurance regulatory reform.
To send NAIFA staff your comments, please contact us at RegReform@naifa.org. - Read NAIFA's policy on Insurance Regulatory Reform
- Read NAIFA’s “FAQ’s on Insurance Regulatory Reform
and Modernization” - Continuum of Perspectives on Insurance Regulatory Reform and Modernization
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Regulatory Reform Proposals
Fortunately, many organizations, including NAIFA, have made regulatory reform a priority. NAIFA has worked closely with state insurance regulators through the National Association of Insurance Commissioners (NAIC)—state regulators created the NAIC in 1871 in part to improve insurance regulation. NAIFA has consulted with the NAIC on a number of major reform efforts, including the NAIC's foremost initiative the Interstate Insurance Product Regulation Compact, or Interstate Compact.
As state-initiated efforts to improve the regulatory system continue, the federal government has more recently weighed in with proposals that, for the first time, call for federal intervention of insurance regulation. One proposal known as the Optional Federal Charter (OFC) has been introduced in both chambers of the U.S. Congress. NAIFA’s policy makers are currently studying the potential impact an optional federal regulator could have on NAIFA members and therefore have not yet taken a position with regard to the OFC proposal in Congress. As NAIFA continues to consider its position on OFC, NAIFA is currently supporting a separate federal proposal called NARAB II that focuses on easing the licensing burdens for NAIFA members that operate in multiple states.
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Click here for a one-pager that outlines the various Insurance Regulatory Reform proposals.
Interstate Insurance Product Regulation Compact (Interstate Compact)
- The Interstate Compact is an initiative of the National Association of Insurance Commissioners (NAIC) to improve the speed-to-market conditions for life insurance, annuity, disability income and long-term care products. The Compact's goal is to get insurance products to market faster by allowing companies to file new products in one place for approval in every state that enacts the compact law. The Compact aims to give insurers who offer products in more than one state a more efficient product approval process than the current multi-state system and to make new products available for sale to consumers sooner.
Optional Federal Charter
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OFC is a proposal to create a federal insurance regulator for any insurer or agent that chooses to be regulated by the federal government, rather than by one or many states. OFC regulation would be optional and the state insurance regulatory system would retain full authority over insurers and agents who continue with the state system. The OFC proposal aims to give insurers the choice to be regulated by one federal entity rather than by many state entities, to allow agents to have one federal license rather than multiple state licenses and to create a regulator who can give the insurance industry a voice in the federal government.
NARAB II Proposal
- The concept of NARAB or the “National Association of Registered Agents & Brokers” was originally included in the Financial Services Modernization Act, known as the Gramm-Leach-Bliley Act (GLBA), which was enacted in 1999. The original NARAB would have established a licensure clearing house if a majority of the states did not enact reciprocity legislation within three years after the enactment of GLBA. Because the states determined that the threshold was satisfied, the clearing house was never established. However, issues burdening the ability for both individuals and agencies to obtain licenses on a multi-state basis remain, and the intent of the new effort – dubbed “NARAB II” – is to move forward with actually establishing the clearing house for interstate licensure
Other State Reform Efforts