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WASHINGTONA prominent lawmaker plans to introduce a bill in the House of Representatives later this month that would allow life and property/casualty insurers to seek national rather than state charters.
Rep. Edward R. Royce, R-Calif., told the annual conference of the American Bankers Insurance Assn. in Washington last week that his bill would resemble the National Insurance Act introduced in the Senate earlier this year by Sens. John Sununu, R-N.H., and Tim Johnson, D-S.D. That bill would give life and property/casualty insurers-but not health insurers-the right to choose to be regulated by federal rather than state authorities. Under current law, most insurance regulation is reserved by the states.
Rep. Royce, who serves on the House Financial Services Committee, noted that some advocates of optional federal charters believe the effort should begin only with life insurers. While limiting the optional federal charter to life insurers might be politically "easier," Rep. Royce said a "broad OFC bill" that would include property/casualty insurers as well is the better approach.
Such legislation would benefit consumers by providing a wider variety of insurance products and "we need as many people on our team as possible," Rep. Royce said.
He noted that Financial Services Committee recently approved a targeted bill that would streamline regulation of excess surplus insurers and reinsurers. He said that while he supports the goal of the Nonadmitted and Reinsurance Reform Act, he does not believe that it will be signed into law because the "base of industry support is too small."
Rep. Royce said his experience as a state legislator helped make him "a strong proponent of providing an optional federal charter." He noted that he served in the California Assembly with California's current insurance commissioner, John Garamendi, with whom Rep. Royce disagrees on virtually every aspect of insurance regulation.
California imposes what the congressman called "an overly intrusive regulatory regime." But in the absence of optional federal charter, large states such as California and New York act as de facto national regulators, he said.
"Congress has the authority to create a national insurance marketplace," said Rep. Royce.
The ABIA is a Washington-based affiliate of the American Bankers Assn. that develops policy and provides advocacy for banks concerning insurance issues.