07-31-2007, 08:19 AM
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Member
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Join Date: Oct 2003
Posts: 3,210
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Optional Federal Charter
This just came out:
Quote:
GENERAL INSURANCE ISSUES
2007-G-5
July 30, 2007
National Insurance Act of 2007 Introduced in the U.S. House of Representatives
On Wednesday, July 25, Representatives Melissa Bean (D-Ill.) and Ed Royce (R-Calif.) introduced the bipartisan National Insurance Act of 2007 in the U.S. House. H.R. 3200 is the companion bill to the Senate version (S. 40), which was introduced in May by Senators John Sununu (R-N.H.) and Tim Johnson (D-S.D.). Rep. Royce had previously introduced H.R. 6225 in the 109th Congress, a similar bill, which would have established both federal and state regulated charters based on the banking industry model. The legislation, sometimes referred to as the “Optional Federal Charter” for insurance, gives life and property and casualty insurance companies the option of choosing to be subject to either state or federal insurance regulation. Insurance companies and agents could continue to be regulated by states if the insurers chose to do so.
The bill further states that national insurers must belong to a state guaranty association in each state in which the insurer sells insurance. If a state guaranty association does not provide policyholders with a level of protection equivalent to National Association of Insurance Commissioners (NAIC) model standards, then the national insurer is required to join the National Insurance Guaranty Corporation established under the proposed Act.
The proposed National Insurance Act creates an independent Office of National Insurance within the Treasury Department similar to those that currently regulate national banks and thrifts, and its commissioner would be appointed by the president for a five-year term subject to Senate confirmation. The bill authorizes separate chartering of life and property-casualty insurers, but allows a holding company to own both life and property-casualty nationally-chartered companies. The new legislation also eliminates rate regulation. Finally, the new bill also gives federally-chartered entities that produce insurance products the ability to add surplus lines of insurance to insurance products if the producers opt for the federal charter. Terms for non-admitted and surplus lines insurance would be clearly defined, and nationally licensed agencies would be permitted to distribute such policies issued by non-admitted and surplus insurers.
The bill has major support from the House Financial Services Committee’s leadership. However, Rep. Barney Frank (D-Mass.), chairman of the committee, has previously indicated that he would support exempting life and commercial property-casualty underwriters from rate controls, but would oppose exempting non-commercial lines of business from rate controls.
The text of H.R. 3200 can be found at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h3200ih.t xt.pdf or by contacting Justin Edwards, the Academy’s Legislative Assistant. If you have any questions regarding any information in the Alert, please feel free to contact Tina Getachew, Risk Management Policy Analyst (getachew@actuary.org).
© Copyright 2007 American Academy of Actuaries. All Rights Reserved.
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This is a good thing, in my opinion.
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