The National Insurance Act of 2006 has split the US market wide open.
Within hours of a bill advocating a federal/state, two-tiered structure to regulate insurance hitting the US Senate, an executive of the National Association of Professional Insurance Agents, seemingly galloped to the capitol shouting, “We adamantly, adamantly, adamantly oppose the optional federal charter.”
Introduced on 5 April 2006, by Senator John Sununu and Senator Tim Johnson, the National Insurance Act of 2006 would permit insurers and producers to choose to be governed by federal or state regulations. The law would have a federal commissioner to handle licensing and regulation of insurers and producers. While the bill may have a hearing in the Senate Banking committee, there is not even a slim possibility Congress will vote on it this year.
A spokesperson for the Independent Insurance Agents and Brokers of America advised that 1,500 of its 300,000 members will fly to Washington and take their “gripes directly to Capitol Hill.” Other insurance organisations, such as the National Association of Mutual Insurance Companies opposed the bill, but the American Insurance Association, which represents about 400 major P/C insurers, backed it, saying it would create a “streamlined, rational regulatory system” that would increase efficiency. Allstate Corp, one of the largest US personal lines insurers, has for years vigorously urged Congress to offer an alternative to state insurance regulation.
The Council of Insurance Agents & Brokers said that if the US is to be successful in pressing its case for open markets and free trade overseas, “it must have uniformity and consistency in the regulatory environment of the 50 states.” The Property Casualty Insurers Association of America expressed concerns that establishing a new federal insurance regulatory office would make its decisions “subject to the political whims of Congress.”
Most opposed to any federal regulation of insurance is the National Association of Insurance Commissioners (NAIC), whose members are state insurance commissioners. In a flanking manoeuvre to forestall federal regulation, the NAIC has created the Interstate Insurance Product Regulation Compact which, if approved by a majority of state legislatures, would create one central point for filing insurance products. However, the products would be restricted to life insurance, annuities, disability income and long-term care insurance products. The Compact, NAIC said, will enhance the speed and efficiency of regulatory decisions and allow companies to compete more effectively.