Washington, D.C. (April 16, 2008) — Consumers would be the major beneficiaries of an optional federal charter system (OFC) of insurance regulation, enjoying strong, national consumer protection standards and a more competitive and efficient marketplace, a representative of the two major associations representing life insurers and property-casualty insurers told a House Financial Services Committee panel.
“An OFC, as set forth in the National Insurance Act of 2007 (H.R. 3200), represents our best opportunity to advance regulatory modernization in a manner that works for consumers, the industry and the economy. At its core, the NIA is a strong consumer protection bill, which focuses on a robust centralized system that emphasizes safety and soundness and consistent market conduct regulation,” said Alastair Shore, chief underwriter of CUNA Mutual Group, in testimony before the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises
“These consumer protections are reinforced through separate consumer affairs and insurance fraud divisions and a new federal ombudsman. Together, these regulatory powers will create a presence that is more responsive to consumers than the current, fragmented state regulatory system,” Shore said in a statement on behalf of the American Council of Life Insurers (ACLI) and American Insurance Association (AIA).
Under the current system, states have put in place sweeping and stifling regulatory regimes that dictate what products insurers can provide and how they conduct even the most routine aspects of their business, Shore said.
“It has been apparent for a long time that the current regulatory system is costly and inefficient with respect to time lost and money spent to comply with a patchwork of antiquated and inconsistent state requirements,” he said.
The Treasury Department’s “Blueprint for a Modernized Financial Regulatory System” recognizes the need for OFC and the role that the insurance industry plays in the new world of integrated and interconnected financial markets. Treasury’s report also notes that the disjointed state insurance regulatory system imposes increased cost and efficiency burdens on insurers and consumers alike, he added.
OFC legislation such as H.R. 3200 establishes stronger, refocused regulation in areas where regulation is necessary to protect consumers, Shore said.
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About ACLI: 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.
About AIA: The American Insurance Association represents approximately 350 major insurance companies that provide all lines of property and casualty insurance and write more than $123 billion annually in premiums. The association is headquartered in Washington, D.C. and has representatives in every state. All AIA press releases are available at www.aiadc.org.