Two heavyweight agent lobbying groups–one representing property-casualty and the other life insurance producers–clashed last week over the life association's qualified support for legislation creating an optional federal charter.
The verbal shot was fired at the board of trustees of the National Association of Insurance and Financial Advisors by Charles Symington, senior vice president of government affairs for the Independent Insurance Agents and Brokers of America.
"The NAIFA decision to move from neutrality to conditional support of optional federal regulation doesn't come as a surprise to many in Washington D.C.," said Mr. Symington. "However, it is likely to be questioned by many life agents–particularly those agents who represent more than one insurance company."
He was commenting on the April 11 NAIFA board decision to recommend that its members support an OFC. Many NAIFA members cross sell, offering property-casualty insurance as well as life coverage.
IIABA and NAIFA have been working together on legislation that would launch a National Association of Registered Agents and Brokers to streamline producer licensing nationwide. NARAB was included in the Financial Modernization Act of 1999–better known as Gramm-Leach-Bliley–but its creation was never triggered under the terms of the law.
The legislation introduced last month–H.R. 5611, the NARAB Reform Act of 2008–would create a voluntary, national licensing system for producers.
NAIFA President Jeffrey Taggart confirmed that between 30 percent and 40 percent of NAIFA members either sell property-casualty insurance as general agents, or are employees of general agencies or captive agencies that also sell p-c products–for example, State Farm and Nationwide.
However, he confirmed his board's decision and said NAIFA had sent a letter to members suggesting they support an OFC. He added that the policy would be presented to NAIFA members at the group's annual meeting this September in San Diego.
He said all constituent groups of NAIFA, including state and local associations, are being consulted on this issue.
The trustees acted after being given assurances by representatives of several large insurance companies in meetings that if a major life insurer elects to become federally chartered, it will not insist that all of its agents and brokers also become federally chartered, according to an official of a life insurance company involved in the talks who asked not to be named.
Mr. Taggart noted that the letter said NAIFA would continue to support the legislation creating NARAB-II–the shorthand term for H.R. 5611.
The letter explained that the Policy Formation Subcommittee of the NAIFA Trustees had recommended that the organization "continue to support the principles underlying state regulation of the business of insurance and efforts to improve the state-based system of insurance regulation," but also "amend the current NAIFA policy on insurance regulatory reform to include support of the OFC concept, provided that several conditions are met."
Specifically, the trustees said in the letter, the qualifications are that, "should the National Insurance Act become law, we want our members to have the option to remain licensed and regulated at the state level."
"We believe any modernization proposals should promote consumer protection, streamline agent licensing, improve product speed to market and improve the competitiveness of the insurance industry," the board added.
The trustees said NAIFA will work to ensure any final legislation includes a provision giving its members the option to choose where to be regulated.
The NAIFA decision means that all major life insurance industry trade groups are backing OFC legislation. Specifically, these include the American Council of Life Insurers, the Association for Advanced Life Underwriting and National Association of Independent Life Brokerage Agents.
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