Oxley Plan Draws Industry Support
Industry groups, including supporters of optional federal chartering, are starting to line up behind a state-based insurance regulatory reform proposal outlined by House Financial Services Committee Chairman Mike Oxley, R-Ohio.
“I think Rep. Oxley is right on the money,” said Robert Rusbuldt, chief executive officer of the Alexandria, Va.-based Independent Insurance Agents & Brokers of America. “He is doing exactly what is needed to reform the insurance regulatory system.”
IIABA has long supported the approach outlined by Rep. Oxley during an appearance last week before the National Association of Insurance Commissioners in New York (see related story, above), which is to use federal tools to create a more uniform system, but to keep actual regulation with the states.
Rep. Oxley ruled out optional federal chartering or any type of dual insurance regulatory system. Rather, he said, his committee would establish a Federal-State Advisory Council to coordinate future discussions over insurance tax policy and uniformity. The goal, Rep. Oxley said, would be to build on the work already done by the Kansas City, Mo.-based NAIC to create a more uniform, efficient and market-based regulatory system.
Ken A. Crerar, president of the Council of Insurance Agents and Brokers in Washington, which supports optional federal chartering, said the Council “heartily embraces” the road map developed by Rep. Oxley and Rep. Richard Baker, R-La., who chairs the Financial Services subcommittee with jurisdiction over insurance.
“While our association fully supports the concept of an optional federal charter for insurers, we don’t believe that the perfect should 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 they provide both carrots and sticks for states to effectively respond.”
Beth Climo, executive director of the American Bankers Insurance Association in Washington, one of the earliest supporters of optional federal chartering, called the Oxley/Baker plan “a step in the right direction to real reform without precluding the possibility of an OFC in the future.”
She said ABIA looks forward to working with the committee to ensure that the federal/state body will have the necessary authority to require states to comply with national insurance policy.
“Absent such clear authority, the outlined reforms could become a road map to greater complexity and confusion, rather than constructive reform,” Ms. Climo said. “Only by granting this power will insurers and consumers be able to see real results from this proposal.”
Mr. Rusbuldt said he hopes to see the industry work with Reps. Oxley and Baker to achieve real reform. He noted that Rep. Oxley said he would take a middle-ground approach, and the proposal he has outlined is “exactly right.” Politics, Mr. Rusbuldt said, is the art of the possible. The Oxley/Baker proposal, he said, is one that can pass.
Among company groups, both the supporters and opponents of OFC also found reason to cheer.
Even though Rep. Oxley ruled out OFC, the Washington-based American Insurance Association, which supports OFC, said his road map would bring significant improvement for insurance consumers.
“Chairman Oxley showed strong leadership in telling state regulators, many of whom oppose national reforms, that the time has come for Congress to act and fix this broken system,” said Drew Cantor, vice president for government affairs with AIA. “We are encouraged by his vision for the future, which is based on free markets, and his active promotion of meaningful reform.”
David Winston, vice president of federal affairs for the Indianapolis-based National Association of Mutual Insurance Companies, which opposes OFC, said NAMIC is pleased that Rep. Oxley has taken OFC and a federal insurance regulatory authority off the table.
He said that NAMIC appreciates Rep. Oxley’s recognition of what he called the “critical strengths” of the state insurance regulatory system and the fact that all the insurance regulatory expertise resides at the state level.
Mr. Winston also praised Rep. Oxley for recognizing that states are much more responsive than the federal government to the needs of the local marketplace and consumers.
Anne Sittmann, a representative of the Property Casualty Insurers Association of America in Des Plaines, Ill., also praised Rep. Oxley for his focus on state-based reform and its benefits to consumers.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, March 19, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.