NCOIL Says Optional Federal Charter Bill Is 'Ill-Advised'

By Chris Grier
BetsWire Service

The group representing state-level insurance legislators has written to the Senate sponsors of the optional federal charter bill telling them the measure is "ill-advised" and would hurt rather than help consumers.

The National Conference of Insurance Legislators, in a letter to Sen. John Sununu, R-N.H., and Sen. Tim Johnson, D-S.D., said it strongly opposes S.40, the National Insurance Act. If the bill were to become law, the legislators would see their authority over insurance matters greatly diminished, as many insurers would opt to be regulated by the federal government, rather than by individual states. In its letter to the bill sponsors, NCOIL makes the case that policyholders would not be as well protected under that scenario, and that adding a federal regulator would complicate the regulatory landscape.

"NCOIL believes that creation of an OFC would allow insurance companies to opt out of state oversight and policyholder protections, and would ultimately impose the costs of a needless federal bureaucracy upon businesses and the public," stated the letter, which was attributed to members of NCOIL's executive committee.

The letter also said that an OFC would "result in a quagmire of federal and state directives and promote ambiguity and confusion" and would also compromise state guaranty fund coverage and cause employers to absorb losses that would otherwise be covered by those funds. "Though well-intentioned," NCOIL said, the bill "is an ill-advised proposal that would bring more harm than good to the consumers we all serve."

The National Governors Association, the National Conference of State Legislatures, the Council of State Governments, and the National Association of Insurance Commissioners have also voiced opposition to the OFC legislation.

A companion bill was filed in the House on July 25 by Rep. Melissa Bean, D-Ill., and Rep. Ed Royce, R-Calif. (BestWire, July 25, 2007).

Source: BestWire Service (www.ambest.com)

From: Insurance News Net (www.insurancenewsnet.com)