WASHINGTON–The Business Roundtable organization of major company chief executives has sent letters to committee leaders in the House and Senate urging adoption of an optional federal charter for insurers and blasting state insurance regulation as outdated and harmful to commerce.
"Our current state-based insurance regulatory structure is one that reflects an economy as it existed in the mid-20th century. While that structure may have worked well then, it simply doesn't work now," said the message from Business Roundtable President John Castellani.
His letter was sent to House Financial Services Committee Chairman Barney Frank, D-Mass., and Ranking Minority Member Spencer Bachus, R-Ala., as well as Senate Banking Committee Chairman Christopher Dodd, D-Conn., and ranking Minority Member Richard Shelby, R-Ala.
Insurers face over 50 different regulatory regimes, the Roundtable noted, which restricts market-based pricing and requires increased government scrutiny. "The result has been an outdated, inefficient regulatory regime that stifles innovation, denies customers the best products at the most competitive prices and harms competitiveness," Mr. Castellani said.
Instead, Mr. Castellani said a federal option for insurers would help the industry. "Importantly, companies could remain in the current state-based system which would create regulatory competition," he said.
"In addition, the system would maintain the mandatory state worker's compensation and auto coverage systems, state premium tax revenue and other critical elements of the state system," he added.
The Roundtable's support for a federal option was welcomed by the Optional Federal Charter Coalition, which is comprised of several industry groups pressing lawmakers to enact OFC legislation.
"This represents a significant development in the effort to reform the current insurance regulatory system and underscores the importance of a competitive insurance marketplace to the broader business community as represented by Business Roundtable," said Marc Racicot, president of the American Insurance Association, an OFCC member.
Mr. Racicot added that Business Roundtable's support "is another indication that we must take steps to enhance America's competitiveness by improving U.S. regulation in a number of industry sectors."
The Coalition also pointed to the Roundtable's support as proof that the OFC is important enough to the economy to draw support from outside the insurance industry.
"Momentum is building to transform our insurance regulatory system to better meet the needs of consumers, insurers, agents and the nation," said Ed Yingling, president and CEO of the American Bankers Association. "Business Roundtable's support of OFC will be a valuable asset in the coalition's advocacy of this much-needed reform."
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