NGA urged to back Nat'l Insurance Act

Two Insurance associations want the National Governors Association to reconsider its opposition to legislation creating an optional federal charter for insurance regulation. “The success of the insurance industry, a major revenue producer for state governments, depends on the existence of a modern and efficient regulatory system that reacts quickly to rapid changes in the marketplace and provides efficiencies and convenience to consumers,” said a letter to Arizona Gov. Janet Napolitano, signed by American Council of Life Insurers chief executive Frank Keating and American Insurance Association president Marc Racicot. Mr. Keating was governor of Oklahoma and Mr. Racicot was governor of Montana. The National Insurance Act was introduced in the Senate and the House to create the optional charter that insurers have called for in recent years as a way to avoid the inefficiencies of regulation by multiple states. State officials, as well as some insurance agent and consumer groups, have strongly opposed the proposal, saying it would weaken consumer protections. “While there has been some progress” in state reforms of insurance regulation, “it has come about much too slowly,” the letter said. An optional federal charter system would encourage states to achieve uniformity and would help make state charters an attractive alternative to a federal charter, the letter argued. “This healthy regulatory competition has produced a strong and vibrant banking system in which some 70% of banks have opted for a state charter,” the letter said. “There is every reason to believe that the same dynamic will occur under an optional federal chartering system for the insurance industry,” the letter said.