WASHINGTON -- Insurance companies should have the option of being regulated by one federal entity rather than on a state-by state basis, CUNA Mutual Group Senior Vice President and Chief Underwriter Alistair Shore told a congressional committee recently.
"The current state system represents a regulatory approach rooted in the 19th Century that includes stifling regulatory regimes and has contributed to the outlaw of risk-bearing capital to jurisdictions with more rational and efficient regulatory systems,'' he told the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises on April 16. "Creating an optional federal charter is imperative to meeting the needs of policyholders and insurers alike.''
The uniform regulatory structure is contained in a bill, sponsored by Representative Melissa L. Bean (D-Ill.), that creates an office within the Treasury Department to charter and license national insurance agencies and license federal insurance providers. Companies would have the option to be subject to federal or state insurance regulations. But even insurance companies choosing to be regulated by the federal government would still be subject to state tax, unclaimed property and mandatory coverage laws.
Shore told lawmakers that the new system, known as Optional Federal Chartering, would change the parts of the existing system that "create inefficiency through higher costs, reduced product offerings, and less consumer choice.''
Sens. Tim Johnson (D-S.D.) and John Sununu (R-N.H.) have introduced a similar measure in that chamber.
--cmarx@cutimes.com
