NU Online News Service

The industry is in for some trying times, says Frank Keating,president and chief executive officer of the American Council ofLife Insurers, Washington.

Keating offered his observations on the challenges that theindustry faces during ReFocus 2008, a gathering of over 300 topexecutives sponsored by the ACLI and the Society of Actuaries,Schaumburg, Ill. "There are a lot of black storm clouds, challengesto the industry," Keating said.

Keating renewed the ACLI's call for an optional federal charter,stating that while enabling legislation may not pass this year,there is a chance it will pass in 2009. There are strong financialreasons for supporting an OFC, he said, citing recent studiessuggesting that an OFC would save $5.7 billion by shifting insurersinto federal regulation and saving the brokerage community another$337 million.

ACLI has "not stiffed the NAIC" (National Association ofInsurance Commissioners) by supporting a federal charter but rathercontinues to work with state insurance regulators, Keatinginsisted. These efforts include work on the Interstate InsuranceProduct Regulatory Commission, Washington, which is a single pointof product filings for life insurers. But the commission addressesspeed-to-market issues and not market conduct or producerlicensing.

"It is 1 leg of a 3-legged stool," he argued.

Even so, he said that both the NAIC and the National Conferenceof Insurance Legislators, Troy, N.Y., are "our allies."

Keating also expressed concern over the current Solvency IIeffort in Europe. There is an attempt to "penalize the U.S. becauseof a lack of movement by the NAIC" to back Solvency II, he said. Ifa company is forced to raise capital levels because the U.S. doesnot have compatible standards with the European Union, he wonderedhow many would move their headquarters to Europe, to be under thejurisdiction of the regulator with more principles-based regulatoryrequirements.

Another concern he raised was the government's need for money inlight of a $1 trillion deficit, a $150 billion tax rebate scheme,the call for universal health care and the expense of waging a warcampaign in Iraq.

"We live in a world that needs money and are an industry thatmust show that the products we offer are for public policyreasons," Keating said.