NAIC Confab To Discuss Federal Chartering

By Jim Connolly

NU Online News Service, Jan. 17, 12:59 p.m. EST?The National Association of Insurance Commissioners meeting next month will focus on the proposed federal chartering of insurers and agents and what states are doing to demonstrate regulatory effectiveness, an NAIC official said.

That outline came from Mike Pickens, NAIC vice president and Arkansas insurance commissioner discussing the association's annual conference Feb. 7-9 in San Antonio, Texas.

Mr. Pickens said that the National Insurance Chartering and Supervision Act legislation introduced by Sen. Charles Schumer, D-N.Y., will be one of the items related to the federal charter discussion.

The bill establishes a new bureau within the Department of the Treasury to be known as the Office of the National Insurance Commissioner patterned after the Office of Thrift Supervision, which charters and supervises federal thrifts, and the Office of the Comptroller of the Currency, which charters and supervises national banks.

A national insurance commissioner would also be chosen to head up the new agency.

Mr. Pickens said that, in general, he personally opposes federal chartering legislation. Firstly, the bill is written by the banking industry, he stated.

He also noted in a recent speech the implication for agents. Practically speaking, Mr. Pickens said, the charter's provisions would not be optional for agents since an agency would need to obtain a federal charter to sell policies offered by a national insurer.

He said that the option is being opposed by many legislators as well as state regulators because it could result in a reduction in state revenues from premium taxes. In the case of Arkansas, according to Mr. Pickens, the state would lose $80 million in revenues.

"It is a question of the necessity of the federal charter bill at this time." He noted the progress state insurance regulation has made in the last year.

The effort state insurance regulators need to make on issues such as speed-to-market and agent licensing will also be discussed, he continued.

Future action will include work on the Improvements to State-based Systems and Coordinated Advertising Rate and Form Review Authority projects, two speed-to-market initiatives.

A review will also be made on the certification of states that comply with the National Association of Registered Agents and Brokers provision of the Gramm-Leach-Bliley Act of 1999, Mr. Pickens added.

A total of 29 states must comply with this reciprocity agreement for regulating agents in order for the NARAB provision not to become effective in November.

To date, according to the NAIC Web site, 39 states have passed legislation or regulation that would satisfy the Act and five states are considering the Producer Licensing Model Act. Thirty-two states plus the District of Columbia have signed reciprocity agreements the Web site states.

Commissioners will also discuss getting the remaining states on board which have not taken action on the Producer Licensing Model Act, Mr. Pickens said.

Special Reports /

NAIC Confab To Discuss Federal Chartering

Related Stories

Recommended For You