Despite the “skepticism” of a key congressional leader, threefinancial services groups have “recommitted” their members to workfor adoption of “comprehensive” legislation creating an optionalfederal charter next year in an attempt to “modernize” insuranceindustry oversight.

The statement of Marc Racicot, president of the AmericanInsurance Association; Frank Keating, president and chief executiveofficer of the American Council of Life Insurers; and EdwardYingling, president and CEO of the American Bankers Association,followed a Nov. 28 meeting at the ACLI offices of the three tradegroup officials and lobbyists for member-companies.

However, the sledding won't be easy for OFC, based on recentcomments by Rep. Barney Frank, D-Mass., who will head the HouseFinancial Services Committee in a Democratic-led Congress nextyear.

Speaking to the Consumer Federation of America on Nov. 30, Rep.Frank seemed supportive of an OFC for life. However, he also notedthe industry is “divided” on the issue–particularly when it comesto federal regulation of property-casualty insurance, with a numberof industry groups vehemently opposing such a move.

Mr. Frank said life insurance “has increasingly become afinancial product, with no geographical issues.”

However, he described p-c insurance as a different matter,saying he is “very skeptical” about an OFC for that sector. “Idon't know any legislator who looks fondly on dealing with autoinsurance,” he said, calling p-c issues “more regional” innature.

Under questioning later, however, he declined to differentiatebetween commercial and personal lines insurance, saying he has notdealt with the issues “in detail.”

Asked to respond to speculation within the insurance industrythat the price for an OFC would be compliance with the CommunityReinvestment Act–which gives federal bank regulators some oversightover the activities of banks, particularly in poorer areas–Mr.Frank dismissed the notion. “There are no deals in the works,” hesaid.

“That all lies ahead,” he explained, at the same time decliningto give a timeline on either hearings or action on issues relatingto insurance regulation.

Still, groups in the industry supportive of an OFC are plowingahead. They have created an Optional Federal Charter Coalition tolobby the incoming Congress for an OFC next year.

Sen. Chris Dodd, D-Conn., presumptive chairman of the SenateBanking Committee, has been more circumspect in his comments aboutsupport for the OFC in any form.

In their statement on Dec. 1, the leaders of trade associationsrepresenting insurers and banks as well as insurance agents andbrokers stressed the “urgent” need for national insuranceregulatory reform.

“The past two Congresses have held a series of hearings aboutthe problems with the current, state-based insurance regulatoryregime,” the statement said. “Conversations began in earnest lastyear about implementing a meaningful new system that would includean optional federal charter.”

Messrs. Racicot, Keating and Yingling noted in their statement arecent speech on U.S. international competitiveness by TreasurySecretary Henry Paulson, during which he discussed insurance,lamenting that the “consequence of our regulatory structure is anever-expanding rulebook in which multiple regulators impose ruleupon rule upon rule.”

“The Coalition agrees that insurance regulatory reform isintegral to maintaining America's leading role in the internationalfinancial services marketplace,” the statement said. “The currentantiquated, state-by-state regulatory system reduces U.S.competitiveness in the global insurance arena, when competinghead-to-head with more efficient and modernized foreignmarkets.”

The statement noted that consumers are also “harmed because theyultimately pay the costs for a regulatory system riddled withredundancies and red tape that ultimately deprives consumers of thebest possible services and product innovations.”