WASHINGTON–The National Association of Mutual Insurance Companies said it remains opposed to an optional federal charter for property-casualty insurers, but will not oppose an OFC system for life insurers because it is "a different industry with different regulatory requirements."
The comments by Charles Chamness, NAMIC president and CEO, elaborate on comments he made concerning insurance regulation during a panel discussion held at last week's Networks Financial Institute annual Insurance Reform Summit.
Regarding other federal involvement, Mr. Chamness said NAMIC supports creation of an Office of Insurance Information within the Treasury Department because "we believe there is a need for the federal government to have more information on our industry, particularly in times of current crisis or post-9/11, and because certain international trade issues cannot be addressed by state regulation."
Mr. Chamness said he was just reiterating an existing NAMIC position on OFC.
But, in voicing the policy, Mr. Chamness said that "while we don't represent the life industry, our board believes there were significant differences in the arguments of the life industry compared to the property-casualty industry on regulation."
Specifically, he said, the life industry is a financial service industry which competes with the banking and securities industries through a variety of investment products.
The issue is important because Rep. Barney Frank, D-Mass., last week said he would support an optional federal charter for life companies, but not for personal lines property-casualty companies.
Mr. Chamness sees significant differences between p-c companies and life companies because p-c "is inherently local and geographic because the risk is essentially local and geographic."
Mr. Chamness argues that "whether we look at the effect of weather or each state's unique tort laws or even the way state courts interpret contract law, all of these are important considerations for the p-c industry" as compared to the life industry.
He acknowledged an OFC would create a different system, but said that "we think it would be workable. They are different industries with different financial products and different competitors, and I think the conclusion that a different regulatory structure might evolve for one is consistent."
But, he said, NAMIC does support a reformed system of state insurance regulation.
"And we are making progress–22 states in the last 5 years have enacted rate reform, our highest priority," he said.
"But more reform is needed…and many of the criticisms of state regulation are legitimate: too much price regulation, too redundant, too inefficient," he added.
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