Florida Group Asks Members to Voice Their Opinion on the Federal Charter

The Florida Independent Insurance Agents have responded with a call to action in which it asks its members to make their opinions heard in Washington about Federal Charter Legislation proposed by the U.S. Senate.

“On April 5, 2006, Senator John Sununu (R-NH) and Senator Tim Johnson (D-SD) introduced S. 2509, the National Insurance Act of 2006, creating an optional federal charter (OFC) for insurance,” FAIA told its members. “As you may know, many large international and domestic insurance companies are pushing for an OFC and calling for the unprecedented establishment of full-blown federal regulation of the insurance industry.

“Proponents of federal oversight contend that federal regulation would promote greater uniformity, reduce costs, and cause less frustration than the current multi-state system.

“Some large insurers argue that they cannot compete against banks and securities firms in today’s consolidated financial services world. They believe that banks and other financial institutions have a distinct advantage by only having to deal with a single federal regulator as opposed to 50 separate state insurance commissioners.

“These companies also feel disadvantaged by the lack of insurance regulatory knowledge at the federal level and seek a federal voice on issues of importance to the insurance industry, particularly tax and trade matters.”

FAIA’s position is that while the need for greater efficiency and uniformity in insurance regulation is clear, the Big “I” believes that an OFC would create more problems than it solves.

“The current state regulatory system has many positive elements that should not be disregarded, including expertise and resources in place from years of regulating,” FAIA explained. “State regulation has worked effectively to protect consumers, largely because state regulators are positioned to be responsive to the needs of local consumers and the local marketplace.

“The state-based system ensures a level of responsiveness that could not be matched at the federal level by a remote federal regulator. Insurance is geographically sensitive due to a wide variance in risks, hurricanes, earthquakes, tornadoes, hail, mold, etc., and we need a local “cop on the beat” with the expertise to handle these unique situations. Having the state regulators deal with these issues for their consumers makes sense, BUT with uniformity in areas that require standardization, such as agent licensing, company licensing, speed to market, market conduct, and more.”

Topics Florida Legislation