The OFCC supports the development of an optional federal charter. Under such a system, an insurer would have the option of obtaining a federal charter in lieu of the current state-by-state system of licensing and regulation. It is an option, an alternative to state regulation, not a replacement for the state-based system.
The OFCC represents the largest and most diverse group to push for a modernized insurance regulatory system. Trade group members include Agents for Change, American Bankers Association, American Bankers Insurance Association, American Council of Life Insurers, American Insurance Association, The Council of Insurance Agents and Brokers, The Financial Services Forum, The Financial Services Roundtable, the Life Insurers Council, the National Association of Independent Life Brokerage Agencies and the Reinsurance Association of America.
Optional Federal Charter Overview
Bringing efficiency and modernization to the insurance regulatory system is essential for improving the global competitiveness of the American insurance industry, ensuring uniform consumer protections, and increasing overall benefit to consumers. Currently insurance industry is regulated almost exclusively by the states. This system is radically different from the single, federal system that brokerages, mutual funds, and commercial banks operate within. Insurers attempting to operate on a national basis are currently required to:
- Be licensed in all 50 states and territories;
- Obtain over 50 separate approvals for each new product;
- Annually undergo over 50 separate market conduct examinations; and
- Meet over 50 different sets of administrative and regulatory requirements.
Legislation reintroduced in the 110th Congress, strongly supported by the OFCC, would create a centralized and uniform national regulatory structure for insurers. The National Insurance Act of 2007, S. 40, was introduced by Sens. John Sununu (R-N.H.) and Tim Johnson (D-S.D.) in May 2007. H.R. 3200, House legislation that closely parallels S. 40 was introduced by Reps. Melissa Bean (D-Ill.) and Ed Royce (R-Calif.) in July.
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