Big-Broker Group Pushes For Charters
While it might appear that all property-casualty insurance producer groups oppose federal chartering, one association of large agents and brokers boasts a history of leading the charge for national intervention.
The Washington-based Council of Insurance Agents and Brokers remains a prime supporter of efforts to make interstate licensing easier for agents, and it backs moves that would create federal chartering.
In July 2001, CIAB President Ken A. Crerar issued a statement unconditionally supporting the American Insurance Association's proposal 
for an optional federal business charter for property-casualty companies.
The problem, Mr. Crerar said, is not a lack of leadership at the state level, but that the pace of reform is not keeping up with changes taking place in the financial services marketplace.
"In order for our industry to create a truly progressive, market-based insurance regulatory system, the AIA model should be seriously considered and embraced by policymakers," he said.
Like other proposals issued on federal chartering, the AIA's plan would create an entity within the Treasury Department, this one named the Federal Insurance Chartering Office. (See page 11 for details on the various proposals.)
Federally chartered property-casualty insurers would be exempt from state licensing, solvency and market-conduct laws. The FICO director would have authority to establish capital and surplus requirements, to take action against financially impaired companies, to establish unfair claim and marketing practice standards, to engage in market-conduct examinations, and to levy fines.
Federally chartered insurers would not have to face rate and form oversight, but would lose antitrust immunity on most ratemaking activity.
The AIA proposal, Mr. Crerar remarked, would help change the "political dynamic" of regulatory debates. At the least, he said, the proposal could effectively do in other areas what the Gramm-Leach-Bliley Financial Services Modernization Act accomplished in forcing the states to act on coordinated licensing reform.
CIAB was instrumental in creating the National Association of Registered Agents and Brokers component of GLB. NARAB would be created under GLB if a certain number of jurisdictions fail to reform agent licensing regulations to create continuity across the country and to reduce paperwork and costs.
"Only the threat of federal intervention through NARABresulted in changes that are making a difference," according to Mr. Crerar.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 28, 2002. Copyright 2002 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.
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