Life Agent Group Backs Federal Role

By Steven Brostoff, Washington Editor

NU Online News Service, Oct. 3, 3:25 p.m. EST,Washington?The nation's leading life insurance agentassociation says it now supports federal involvement in theinsurance industry through Congressional action to improve andaugment state regulation.

In a new policy position, the National Association of Insuranceand Financial Advisors in Falls Church, Va., said that it continuesto support the "principles" underlying state regulation ofinsurance, but that a federal role is necessary to assure nationaluniformity and cost-efficiency.

Any federal action aimed at improving the system, NAIFA said,must reflect certain guidelines.

With respect to agent licensing and continuing educationrequirements, NAIFA said that all insurance agents should belicensed, and that duplicative licensing requirements should beeliminated.

Each insurance agent, according to NAIFA, should be required todemonstrate to only one regulator that he or she is qualified to belicensed and represent either a state-chartered orfederally-chartered insurer.

NAIFA said that uniform substantive and procedural licensingrequirements should be established for each class of similarlysituated agents, and that each insurance agent should need tosatisfy only a single set of continuing education requirements foreach line of business.

The uniform licensing requirement, NAIFA added, should include amandatory criminal background check. NAIFA said that a database,which would be available only to financial services regulators,should be established to identify those who have committedfraud.

Turning to consumer protection, NAIFA said that the taxincentives supporting life insurance and other insurance productsmust be preserved. Uniform trade practices and consumer protectionrequirements should apply to all insurance sales and serviceactivities, NAIFA said.

Insurance companies, according to NAIFA, must adhere to adequatesolvency standards that include guaranty funds or similar fail-safemechanisms.

Regarding rates and forms, NAIFA said that all duplicativefiling and approval requirements should be eliminated, and uniformfiling and approval requirements established. However, NAIFA added,"quality to market" concerns should not be sacrificed for "speed tomarket."

Regarding changes in regulatory rules and procedures, NAIFA saidthat current regulatory expertise should be preserved to themaximum extent possible consistent with efficient regulation.

Agents, NAIFA added, must be allowed a genuine option of whetherto submit to any newly created regulatory authority. NAIFA saidthat agents should have an institutionalized role in thedevelopment and application of all new regulatory rules, structuresand procedures.