Japanese Insurers Approve Of Optional Fed Charter

Optional federal charter legislation proposed in the Senate has the approval of Japanese insurers, but it currently awaits a hearing in the Senate Banking Committee.

Tadashi Kodama, chairman of the General Insurance Association of Japan, said he “welcomes the initiative takes by Sens. John Sununu, R-N.H., and Tim Johnson, D-S.D., introducing federal regulation” last month, according to the American Insurance Association.

Mr. Kodama added that since an agreement was reached on insurance between Japan and the U.S. in 1994, the Japanese property & casualty industry “has called for regulatory uniformity among the different states on as many occasions as possible,” including Japan-U.S. insurance consultation and in World Trade Organization negotiations.

Mr. Kodama's statement was sent to AIA President Marc Racicot, whose group is among the proponents of the OFC in the U.S., and echoed many of the complaints the AIA has made about the state-based regulatory system.

The difference in regulations from state to state “has caused various inefficiencies” by delaying product introductions and increasing development costs as companies meet the varying requirements of individual jurisdictions, Mr. Kodama noted.

“We applaud the current initiatives to introduce a federal regulatory structure into the U.S. insurance market,” he said. “It must allow consumers to have opportunities to obtain insurance products without unnecessary delay. We sincerely hope that a forward-looking discussion on this issue will take place among the concerned parties, including the private sector, to realize truly effective federal regulation.”

Optional Federal Charter legislation is unlikely to be approved by Congress this year, as Congress deals with more pressing issues and a shortened legislative calendar. Sen. Sununu acknowledged as much when introducing the bill, but said he hoped it would serve as a “foundation” for discussion on the issue going forward.