Insurance Trade Groups Back Rep. Oxley Scheme

By Steven Brostoff, Washington Editor

NU Online News Service, March 15, 3:44 p.m. EST,Washington?Industry groups, including supporters ofoptional federal chartering, are starting to line up behind astate-based insurance regulatory reform proposal outlined by HouseFinancial Services Committee Chairman Mike Oxley, R-Ohio.[@@]

"I think Rep. Oxley is right on the money," said RobertRusbuldt, chief executive officer of the Alexandria, Va.-basedIndependent Insurance Agents and Brokers of America.

"He is doing exactly what is needed to reform the insuranceregulatory system," Mr. Rusbuldt said.

IIABA has long supported the approach outlined by Rep. Oxleyduring a speech before the National Association of InsuranceCommissioners in New York, which is to use federal tools to createa more uniform system, but to keep actual regulation with thestates.

In his speech, Rep. Oxley ruled out optional federal charteringor any type of dual insurance regulatory system.

Rather, he said, the Committee would establish a Federal-StateAdvisory Council to coordinate future discussions over insurancetax policy and uniformity. The goal, Rep. Oxley said, would be tobuild on the work already done by the Kansas City, Mo.-based NAICto create a more uniform, efficient and market-based insuranceregulatory system.

Ken A. Crerar, president of the Washington-based Council ofInsurance Agents and Brokers, which supports optional federalchartering, said the Council "heartily embraces" the road mapdeveloped by Rep. Oxley and Rep. Richard Baker, R-La., who chairsthe Financial Services subcommittee with jurisdiction overinsurance.

"While our association fully supports the concept of an optionalfederal charter for insurers, we don't believe that the perfectshould become the enemy of the good," Mr. Crerar said.

"The proposals offered by Chairman Oxley are better than good,"he added. "They would build upon state-based efforts and theyprovide both carrots and sticks for states to effectivelyrespond."

Beth Climo, executive director of the Washington-based AmericanBankers Insurance Association, one of the earliest supporters ofoptional chartering, called the Oxley/Baker plan "a step in theright direction to real reform without precluding the possibilityof an OFC in the future."

She said ABIA looks forward to working with the Committee toensure that the federal/state body will have the necessaryauthority to require states to comply with national insurancepolicy.

"Absent such clear authority, the outlined reforms could becomea road map to greater complexity and confusion, rather thanconstructive reform," Ms. Climo said. "Only by granting this powerwill insurers and consumers be able to see real results from thisproposal."

Mr. Rusbuldt said he hopes to see the industry work with Reps.Oxley and Baker to achieve real reform. He noted that Rep. Oxleysaid he would take a middle-ground approach, and the proposal hehas outlined is "exactly right."

Politics, Mr. Rusbuldt said, is the art of the possible. TheOxley/Baker proposal, he said, is one that can pass.