Regulators To NAIFA: Rethink Fed Charter Backing

The resolution says NAIC members "encourage and support the efforts of NAIFA members to amend their newly adopted policy to clarify their long-standing support for state insurance regulation and their strong opposition to the creation of a federal insurance regulator or a so-called ?optional or dual federal charter' for insurers and producers."

The resolution says that NAIFA's new stance "represents a significant change of their long-standing policy in support of state regulation and appears not to be understood or supported by their individual members in many states."

David F. Woods, chief executive officer of the Falls Church, Va.-based NAIFA, said the association is very disappointed that this group of commissioners is apparently responding to what he believes is a very small group of NAIFA members.

Nationally, Mr. Woods said, he has heard from only about 50 NAIFA members who registered complaints about NAIFA's policy, and about one-half of those members simply wanted an explanation.

He does not believe, he said, that any more than a small number of members oppose NAIFA's policy.

Moreover, Mr. Woods said, he is concerned about regulators attempting to influence those they regulate. He added that many of the statements made in the resolution are incorrect. For example, Mr. Woods said, the very first line of NAIFA's policy reemphasizes its strong support for state regulation.

Mr. Woods said, however, that the controversy demonstrates how influential an organization NAIFA is, in that NAIFA's policy stirred some commissioners to take this type of action.

The resolution says that NAIFA's policy represents a "significant reversal" of the association's full support of state insurance regulation and a significant departure from the position of other national associations of professional insurance producers who fully support state regulation and are strongly opposed to creation of a federal insurance regulator or optional federal charter.

NAIFA's policy, the resolution adds, may have the effect of undermining the support and implementation of the NAIC's Action Plan for Regulatory Modernization.

NAIFA adopted its policy at its January 2004 board meeting, citing changing dynamics in the life insurance industry as the reason it is now considering a federal role in insurance regulation.

If properly enacted, NAIFA says, federal legislation could create a national producers license, a single point-of-entry for insurance products that would increase speed-to-market and create a federal insurance advocate who could address the needs of consumers and the industry on a national level.