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U.S. Senator John Sununu (R-NH), who introduced the National Insurance Act of 2006 with Senator Tim Johnson (D-SD) on April 5, 2006, opened hearings today on the controversial legislation that would allow life and property/casualty insurers to choose federal rather than state charters under an “optional federal charter” regulatory system.
The Senate Committee on Banking, Housing, and Urban Affairs, of which Sununu and Johnson are members, took up the subject of Insurance Regulatory Reform at a hearing on Tuesday, July 11.
“This hearing provides a welcome opportunity for committee members to examine the issue of insurance regulatory reform, including the legislation that Senator Johnson and I have put forth to improve the regulation of life and property and casualty insurance,” said Sununu. “I look forward to reviewing the specifics of the ‘National Insurance Act of 2006’ with the witnesses today and at additional hearings expected to be held this summer and fall.”
Sununu said the current syustem of state regulation does not emet today’s needs.
“Unlike the modernization of banking and securities of the late 1990s under the Gramm-Leach-Bliley Act, the insurance industry remains subject to a patchwork of state regulations that have stifled competition, innovation and growth,” he maintained. “The existing governing system spreads across more than 50 jurisdictions and has proven burdensome and expensive for all concerned. A more uniform regulatory environment mirroring the highly successful dual banking system is long overdue and stands to substantially improve the environment for those who buy, sell, and underwrite life and property and casualty insurance.”
He added that in his opinion states have not been able to modernize the xcurrnet system quickly enough.
“State commissioners may have hoped to achieve uniformity and market-based reform within the state regulatory scheme, but those improvements have simply not occurred and are not expected in the near future,” Sununu continued. “Streamlining an overwhelming and tangled web of state rules for financial regulation, licensing, policy forms, rates, and market conduct exams under an ‘optional federal charter’ system will encourage greater competition. Moreover, new and innovative insurance products will become available to the consumer more quickly.”
Insurance company and agent trade groups are expected to testify at today’s hearing.