ACLI President and CEO Frank Keating issued today the following statement in response to the U.S. Treasury Department’s proposed “blueprint” for financial services regulatory reform:
Washington, D.C. (March 31, 2008) — “The optional federal insurance charter (OFC) initiative took a dramatic leap forward today as Treasury Secretary Henry Paulson included a recommendation in the blueprint for financial services reform to create an Office of National Insurance (ONI) within the Treasury Department.
“The proposal for change comes at a propitious time. Congress will soon examine the causes behind the recent market turbulence and re-start its review of insurance regulation reform legislation. ACLI will stress the compelling case for an OFC and its importance to life insurers and their customers.
“Efficiencies resulting from a national, streamlined regulatory structure will lead to an improved availability of innovative financial and retirement security products. An OFC would offer a high level of uniform consumer protections. Indeed, our highly-mobile society deserves a national regulatory structure where consumer protections are not won or lost based upon a consumer's state of residence.
“Specifically, an OFC also would reform a system that originated in the 19th Century to regulate state and local insurance activities. Of course, many insurers today are operating not just nationally, but internationally. A national regulatory system is needed to address modern market issues and to represent U.S. interests at home and abroad.
“The need for an OFC is clear – and well documented. For example, numerous studies conducted for ACLI point to lower premiums for consumers as a result of the creation of an optional federal charter. One study alone found that improved efficiencies could yield up to $5.7 billion in savings. ACLI is dedicated to improved efficiencies at the state level as well, so that these same benefits will be realized for consumers of companies that choose to remain state regulated.
“The incessant challenges to insurer efficiency resulting from the patchwork of 50 different state jurisdictions requires a regulatory structure that is modernized and offers the option of uniform, national regulation. ACLI strongly encourages Congress to act on the overwhelming evidence of an OFC's benefits as it reviews the overall state of financial services regulation."
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The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association whose 353 member companies account for 93 percent of the life insurance industry’s total assets in the United States, 93 percent of life insurance premiums and 94 percent of annuity considerations. In addition to life insurance and annuities, ACLI member companies offer pensions, including 401(k)s, long-term care insurance, disability income insurance and other retirement and financial protection products, as well as reinsurance. ACLI's public Web site can be accessed at www.acli.com.