BY JIM CONNOLLY AND ARTHUR D. POSTAL
The National Conference of Insurance Legislators, which said there is “no room” for an optional federal charter, will propose a resolution opposing OFC legislation in Congress during its spring meeting this week in Washington.
Indeed, state lawmakers and regulators are joining together and ratcheting up their opposition to federal legislation—the National Insurance Act—that would create an optional federal charter for insurers.
NCOIL’s president—State Rep. Brian Kennedy, a Democrat from Rhode Island—said that through their national organizations, state officials have “collectively agreed” to oppose OFC legislation.
NCOIL is being joined by the National Association of Insurance Commissioners, the National Governors Association and the National Conference of State Legislatures, Rep. Kennedy said. The groups have agreed to accept the NCOIL draft resolution as a model template for states “to reiterate to their congressional delegations the harmful effects of OFC legislation currently active in both chambers of Congress,” he added.
The proposed resolution says that an OFC “would eventually draw from the states the almost $14 billion of critical premium tax revenue they receive, bifurcate insurance regulation, result in a quagmire of federal and state directives, erode key consumer protections, and compromise guaranty fund coverage, among other things,” he noted.
Separately, NAIC President Sandy Praeger released a letter sent to the president of the American Insurance Association reiterating her opposition to an OFC.
The letter exchange began when the Washington-based AIA wrote to Ms. Praeger, the Kansas insurance commissioner, to criticize her article, “Federal Bill Unnecessary,” published Feb. 7 on her insurance department’s Web site.
In the letter to Ms. Praeger, AIA President Marc Racicot noted that AIA has worked with the NAIC and individual commissioners to reform insurance regulation, but that progress has been “uneven and has come about slowly.”
Mr. Racicot, a former Montana governor, went on to write that insurers need a “modern and efficient regulatory structure,” adding that this can only be achieved through a federal charter option.
States, he said, will continue to receive premium tax revenue, noting that an OFC would be optional and consumers could decide whether to buy coverage from a state- or federally-regulated insurer, much the way that they do business with state- or federally-chartered banks.
Mr. Racicot added that states would retain authority over state-regulated insurers. He said an OFC would not create a federal bureaucracy because a regulator would be appointed within the Department of Treasury, while start-up costs for an Office of National Insurance would be provided through assessments on insurers.