ABIA Commends Bernanke for Recommending an OFC
February 25, 2009
ABIA Commends Bernanke for Recommending an OFC
WASHINGTON- The American Bankers Insurance Association commended Federal Reserve Chairman Ben Bernanke today for urging congress to consider establishing an optional national insurance charter (OFC). An OFC would increase benefits to consumers, enhance the global competitiveness of the American insurance industry, and bring greater uniformity and effectiveness to the regulatory process.
Speaking before the House Financial Services Committee today Chairman Bernanke backed the call for creating an OFC saying “it would be a useful idea.” Bernanke went on to urge congress to contemplate the value of an OFC saying that this is “a direction worth giving serious consideration.”
“Chairman Bernanke’s testimony today highlights the urgent need to have a national discussion that recognizes the value of this much needed reform,” said Kevin McKechnie executive director of ABIA. “This long overdue measure would create greater efficiency and modernization for the insurance regulatory system.”
McKechnie explained that consensus behind an OFC has increasingly picked up steam following the failure of the current state by state regulatory system to act in preventing the problems at insurance giant AIG from becoming a systemic risk to the national economy.
"To suggest that the states can appropriately police insurance companies with worldwide operations, when other nations are loudly suggesting a global systemic risk regulator, is naïve. Clearly, solvency is a federal question," said McKechnie.
Under current law, insurance providers must follow differing—sometimes conflicting—regulations in each state in which they operate. Insurers face obstacles such as inconsistent regulations, barriers to innovation, conflicting agent licensing and education requirements, among others. All of these factors drive up the price of products and slow down innovation and delivery of new products to consumers.
The ABIA was created in 2001 through the combination of the American Bankers Association Insurance Association and the Association of Banks-in-Insurance. ABIA is a separately chartered affiliate of the American Bankers Association and is the only Washington, D.C. based full-service association for bank-insurance interests. ABIA can be found on the Internet at http://www.theabia.com
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Note to editors: Chairman Bernanke’s testimony can be accessed at the following link Click Here To View Archived Webcast. Bernanke addresses the issue of an OFC in response to questioning from Congressman Royce at the one hour 57 minute mark.