Washington–An insurance agents group is moving to galvanize public opinion against congressional proposals for optional federal chartering of insurers by pushing a model resolution opposing the concept with state legislatures.

The National Association of Professional Insurance Agents said it took the action in the expectation that OFC legislation will soon be reintroduced in Congress.

“Those who want to dismantle state regulation of insurance and replace it with a federal government takeover are at it again,” said Len Brevik, PIA executive vice president and chief executive officer. “It is critical that the states again express support for insurance regulation at the state level.”

The PIA has called on all of its state affiliates to lobby their legislatures for passage of the model resolution, which opposes the idea of allowing insurers to opt between traditional state regulation and a single federal regulator based on the system currently used by the banking industry.

The “optional federal charter,” according to the PIA, is merely a cover for a federal takeover of insurance regulation.

“There would be nothing 'optional' about optional federal charters,” said Mr. Brevik. “This is just the latest attempt to take control away from the states and impose federal regulation of insurance. It's a bad idea, one that needs to be put out of its misery once and for all. We urge each state legislature to go on record against this attempted federal encroachment.”

The OFC legislation is expected to be introduced in the Senate by Sens. John Sununu, R-N.H., and Tim Johnson, D-S.D., and will likely call for the federal regulator to be established within the Treasury Department.

The PIA also argued that a federal insurance regulator could have significant ramifications for state budgets, noting that insurance companies paid a total of $13.8 billion in annual premium taxes to the 50 states in 2004, according to the U.S. Department of Commerce.

“Big banks and big life insurers are behind this special interest legislation because they think it will benefit them,” said Mr. Brevik. “But it would be very detrimental to the states and to consumers across the nation. It would supplant the existing system of state oversight that has worked well for over 100 years with a brand new federal bureaucracy in Washington, D.C.”

Backers of previous incarnations of the OFC legislation, however, have consistently maintained that premium taxes would still be collected and controlled by the states.

Reps. Mike Oxley, R-Ohio, chairman of the House Financial Services Committee, and Richard Baker, R-La., who chairs a key subcommittee, have drafted an alternative to the OFC known as the State Modernization and Regulatory Transparency (SMART) Act, which would establish rules for regulating insurance that would be enforced at the state level.

The White House has not yet taken a position on the issue, and Mr. Brevik called on insurance agents to voice their opposition to federal insurance regulation.

“The administration needs to know that Main Street insurance agents and their customers want choices at the local level, not another government bureaucracy in Washington, D.C.,” he said.

Special Reports /

PIA Ramps Up Grass Roots OFC Opposition

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