WASHINGTON–The National Conference of Insurance Legislators has written Treasury Secretary Tim Geithner telling him that creation of an optional federal charter for insurers would jeopardize jobs and revenues that "vibrant insurance markets" generate for states.
In their Thursday letter, NCOIL leaders said they were "taken aback" by Mr. Geithner's "pro-OFC comments" in his first public appearance as Treasury secretary Tuesday at the Senate Banking Committee.
But, said NCOIL officials, "We are optimistic that as you review OFC proposals, you will recognize that allowing insurers to hand-pick their regulator is not in the best interest of all."
The letter was signed by NCOIL's president, New York State Sen. James Seward, R-Oneonta; president-elect, Kentucky State Rep. Robert Damron, D- Nicholasville; vice president, North Dakota State Rep. George Keiser, R Bismarck; secretary, New Mexico State Sen. Carroll Leavell, R-Jal; and treasurer, Indiana State Sen. Vi Simpson, D-Elletsville.
They said that "OFC proposals would jeopardize state budgets and jobs."
They cited statistics indicating that state insurance fees, assessments and premium tax revenue total around $16 billion nationwide and are used to fund state insurance departments and state general funds.
The letter added, "Vibrant insurance markets–which states have facilitated across the country–provide millions of jobs that, particularly during this time of economic crisis, must be protected."
In their letter, they stressed the "folly" of an OFC, saying that it would "irreparably damage insurance oversight by promoting regulatory arbitrage and substantially weakening consumer protections."
The NCOIL leaders also said that state legislators would not sit idly by while efforts were made to weaken insurance oversight.
They stressed "that more would be lost than would be gained by pursuing the OFC concept."
The NCOIL officials added, "We feel that the adverse effects of an OFC would outweigh any purported benefits."
They argued that an OFC would "bifurcate insurance regulation and result in confusing and overlapping federal and state directives."
"Consumers would rather contact their local representative or state insurance department than wait in line on a 1-800 number out of Washington, DC," the legislators added.
(Arthur Postal can be contacted at apostal@nuco.com or 202-728-0506).
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