Mr. Symington is correct when he stated that the Federal Charter \”will create more proplems than it solves\”. The biggest new problem for carriers is going to be the increased loss ratios with agents writting new business out of their normal marketing area. Writing business out of your normal marketing area takes special underwriting tools and experience.
Ask any consumer if they know whether their local bank is a state bank or a federal bank and you will find that at the consumer level the difference is indistingushable.
The same would follow with the Optional Federal Charter. The consumer is better served as carriers and agents will not be burdened by having to deal with 50 regulators as they do business on a regional or national level.
Those agencies and carriers that choose to be regulated at the state level can still do so and their lives will be unchanged.
Many members of the Big I will find the Optional Federal Charter meets there particular business needs and the Big I would better serve its membership by encouraging progress and modernization.
The Optional Federal Charter is just another step in moving the insuance industry into the mainsteam of interstate commerce.
It doesn\’t have to be an all or nothing solution.
Why not make the Insurance Company and Agent\’s licenses be uniform throughout the US…honored in all 50 states. Let the State retain the right to regulate which companies do business within each state, based on the needs of each state.
There is NO NEED for another major federal beauracracy. While the comparison to FEMA might be a little disingenuous, it makes a valid point.
The bottom line remains that insurance effects the lives of 100% of Americans and having 50 different sets of rules for companies and agents to have to adhere to is just plain stupid.
Name me one thing that the Federal Government regulates that is not a bureaucratic nightmare and I will consider a Federal Charter a good thing. I guarantee that the federal govt. has no idea how the insurance industry operates and does not care. We will end up operating under a massive burden of regulations that will kill our business at the agency level. Call OSHA the IRS or the U.S. Post Office and try to get some information or cooperation and see how you like it.
I am always amazed by how people will paint \”doom\” because of change, when they are afraid merely of change, rather than the issues at hand. Change is inevitable. And it is often good. Your car was a change from horse and buggy — and there was a similar irrational \”doom\” for that… yet I doubt we would undo that change.
Federal regulation of insurance has met it\’s time. One form to learn per coverage, yet exceptions by State where State law demands it. One license to obtain, yet demands for additional learning based on certain areas of coverage or locality. One entity to make the rules of regulation, but a requirement that this new agency have a physical office location with a bureau chief in every State. One financial review for a carrier to deal with — and the quality of that could remove them from the country, rather than merely a single state (and that\’s a good thing).
This new regulatory agency hasn\’t been created yet — so it makes much more sense to work on defining it, and getting it done right, than to be the prophet of doom. Let\’s not sit back and tear down every reason it cannot work — let\’s embrace the opportunity and work on designing it correctly!
It will work. It will have a rough start… all change does, and this isn\’t a piece of cake. But the industry will make it work, and the federal bureau created will have to make it work — because it\’s an industry that this country cannot live without. We, in the industry, need to step up to the plate, work to get the right people involved as the leaders of the new bureau, and help them design a system that improves where we have problems, as well as retain the local flavor of local bureau chiefs and staff. Come on now… if the States no longer regulate insurance, where do you think those employees will apply for a job next week — and there you go, if you like them, you still have that relationship you\’ve been building for years (we should also mention that there are all kinds of regulators that you\’d like to be rid of, as well as there being many of them that come and go every 2 years or so anyway).
The good of federal regulation is so overwhelming it\’s a joke to compare. The State does fine inside it\’s borders. But the States simply cannot play nice when dealing with each other — and there\’s no place to appeal those issues — which is why the same issues are still hanging around totally unsolved for the last 30 years that I\’ve dealt with them. Licensing is a joke. Multi-state risks are a joke. Surplus Lines regulation on a comparitive State basis is a joke. We need \”final word\” on these issues, and dozens more. Even the States that WANT to fix these issues can\’t get it done, because it takes only ONE State to mess up any cooperation (and there are plenty in any one year that will take that position). Imagine trying to run the U S Senate where you have a 90-10 vote, but the measure still doesn\’t pass!… but that\’s precisely what can happen on national issues with 50 States voting. That alone, is total nonsense, and makes it pretty clear that federal oversight it sorely needed.
Why do we have state boundries? Why do the colleges of Ohio fevorently battle those of Michigan? Why do we have different license plates on cars registered in different states? Why are there different tax rates in each state, etc, etc, etc…
This seems foolish, we are all Americans, WHY DON\’T WE JUST CREATE A UNITED STATE OF AMERICA?
I\’m all for it… States of America, TEAR DOWN THOSE WALLS! Then the next time you are asked where did ya come from, you can say: Im from the UNITED STATE OF AMERICA. Our forfathers were a bit antequated. They thought that the best way to solve problems was with FREEDOM and AUTONOMY and to do so at the MOST LOCAL LEVEL, not necessarily an OVERPOWERING & CONTROLING FEDERAL GOVERNMENT. Now that we have been \”enlighted\” we realize that our founding fathers were \”old fashioned\” with their inferior intelect that only reaches as far as COMMON SENSE…
Do I have to go on any further, I hope you have found the satire here against those that would support federal regulation. If not, here is an anology that might help:
If I have a problem in my own back yard, the first person to complain about it, and demand that it be cured, would be my next door neighbor, not the folks that live accross town, or, for that matter, in another state.
Federal regulation of an industry that is so regionally specific is just another excuse for BIGER GOVERNMENT. Not in my back yard!
I appreciate Mr. Symington\’s comments and want the Insurance Journal\’s audience to be aware that we share many of the same concerns about the problems of state insurance regulation. We also agree that most of the solutions to what ails the state regulatory system will be found in Washington, D.C.
For example, the Big I’s proposal to modernize state insurance regulation is to have Congress enact a series of uniform national insurance standards and then require the states to enforce them. The SMART Act proposal would do exactly that. By definition, a national standard preempts state regulation completely. This would achieve commonality of regulation across jurisdictions but removes the ability of individual states to exercise discretion in their insurance laws. We think the legislation introduced by Senator John Sununu and Senator Tim Johnson offers a more even handed approach.
The proposed National Insurance Act (S.2509) would create a new federal system and leave the state system completely intact. Whereas creating national standards achieves regulatory uniformity by replacing state regulation, establishing an Optional Federal Charter would leave state regulation intact. For insurers and insurance agents that wish to choose it â€â€Ŕ and pay for it â€â€Ŕ an Optional Federal Charter achieves uniformity by establishing one set of federal rules not by preempting state rules.
This is not a message I saw reported in the Journal.
The message I did see reported was misleading and unfortunately wrong. For example, according to Mr. Symington , “\”With the creation of a new Office of National Insurance in downtown Washington, D.C., agents would lose the capability of communicating with the state regulator and his or her staff, whom you may know personally from many years of business.”
I can find no other way to describe this statement as other than fear-mongering.
The Sununu/Johnson bill authorizes a federally licensed agent to sell insurance for any company, whether state or federally chartered. At the same time, S. 2509 does not require a state-licensed agent to obtain a federal license. S. 2509, therefore, does not impede the ability of a state licensed agent to sell the products of a federally licensed insurer in any state for which the state licensed agent holds a license.
The legislation was drafted in this fashion expressly for agents concerned about having to obtain a federal license. The legislation makes it possible for an agent licensed in Mississippi to sell exactly the same array of products, from either a state or federally licensed insurer, as a federally licensed agent. This kind of competitive parity is important and ensures that state licensed agents and federally licensed agents will compete for business on a level playing field.
How creating a competitively neutral agent licensing mechanism as part of an Optional Federal Charter bill impedes an agent’s ability to call Commissioner Dale is, therefore, a mystery to me.
The Journal also reports that Mr. Symington thinks “Regulators would not have the power to review [insurance] the forms.” I think this may be inaccurate reporting. Mr. Symington is a lawyer and a good one. I’m sure he has read S. 2509 and would not have missed the sections of that bill describing the power of the National Insurance Commissioner to establish criteria for insurance policies, the obligation to examine national insurers to make sure that both the policies and the sale practices under which the policies are offered comport with federal regulation, and the penalties that apply if the regulations are not followed.
Lastly, the Journal reports that Mr. Symington is worried an agent will be confused by the difference between their state’s regulation and federal regulation. Well. There are 56 U.S. insurance jurisdictions and those of us who have represented national clients in our careers have had to contend with all of them at one point or another and sometimes, simultaneously. I agree completely: the state insurance system is enormous, disparate and quite confusing.
That’s why Senator Sununu and Senator Johnson are proposing the creation of an Optional Federal Charter establishing one set of federal rules that will apply nationwide.
There should be nothing confusing about that.
J. Kevin A. McKechnie
Chairman
The Optional Federal Charter Coalition
Director of Government Relations
The American Bankers Insurance Association
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Mr. Symington is correct when he stated that the Federal Charter \”will create more proplems than it solves\”. The biggest new problem for carriers is going to be the increased loss ratios with agents writting new business out of their normal marketing area. Writing business out of your normal marketing area takes special underwriting tools and experience.
Ask any consumer if they know whether their local bank is a state bank or a federal bank and you will find that at the consumer level the difference is indistingushable.
The same would follow with the Optional Federal Charter. The consumer is better served as carriers and agents will not be burdened by having to deal with 50 regulators as they do business on a regional or national level.
Those agencies and carriers that choose to be regulated at the state level can still do so and their lives will be unchanged.
Many members of the Big I will find the Optional Federal Charter meets there particular business needs and the Big I would better serve its membership by encouraging progress and modernization.
The Optional Federal Charter is just another step in moving the insuance industry into the mainsteam of interstate commerce.
It doesn\’t have to be an all or nothing solution.
Why not make the Insurance Company and Agent\’s licenses be uniform throughout the US…honored in all 50 states. Let the State retain the right to regulate which companies do business within each state, based on the needs of each state.
There is NO NEED for another major federal beauracracy. While the comparison to FEMA might be a little disingenuous, it makes a valid point.
The bottom line remains that insurance effects the lives of 100% of Americans and having 50 different sets of rules for companies and agents to have to adhere to is just plain stupid.
One man\’s opinion anyway.
Name me one thing that the Federal Government regulates that is not a bureaucratic nightmare and I will consider a Federal Charter a good thing. I guarantee that the federal govt. has no idea how the insurance industry operates and does not care. We will end up operating under a massive burden of regulations that will kill our business at the agency level. Call OSHA the IRS or the U.S. Post Office and try to get some information or cooperation and see how you like it.
I am always amazed by how people will paint \”doom\” because of change, when they are afraid merely of change, rather than the issues at hand. Change is inevitable. And it is often good. Your car was a change from horse and buggy — and there was a similar irrational \”doom\” for that… yet I doubt we would undo that change.
Federal regulation of insurance has met it\’s time. One form to learn per coverage, yet exceptions by State where State law demands it. One license to obtain, yet demands for additional learning based on certain areas of coverage or locality. One entity to make the rules of regulation, but a requirement that this new agency have a physical office location with a bureau chief in every State. One financial review for a carrier to deal with — and the quality of that could remove them from the country, rather than merely a single state (and that\’s a good thing).
This new regulatory agency hasn\’t been created yet — so it makes much more sense to work on defining it, and getting it done right, than to be the prophet of doom. Let\’s not sit back and tear down every reason it cannot work — let\’s embrace the opportunity and work on designing it correctly!
It will work. It will have a rough start… all change does, and this isn\’t a piece of cake. But the industry will make it work, and the federal bureau created will have to make it work — because it\’s an industry that this country cannot live without. We, in the industry, need to step up to the plate, work to get the right people involved as the leaders of the new bureau, and help them design a system that improves where we have problems, as well as retain the local flavor of local bureau chiefs and staff. Come on now… if the States no longer regulate insurance, where do you think those employees will apply for a job next week — and there you go, if you like them, you still have that relationship you\’ve been building for years (we should also mention that there are all kinds of regulators that you\’d like to be rid of, as well as there being many of them that come and go every 2 years or so anyway).
The good of federal regulation is so overwhelming it\’s a joke to compare. The State does fine inside it\’s borders. But the States simply cannot play nice when dealing with each other — and there\’s no place to appeal those issues — which is why the same issues are still hanging around totally unsolved for the last 30 years that I\’ve dealt with them. Licensing is a joke. Multi-state risks are a joke. Surplus Lines regulation on a comparitive State basis is a joke. We need \”final word\” on these issues, and dozens more. Even the States that WANT to fix these issues can\’t get it done, because it takes only ONE State to mess up any cooperation (and there are plenty in any one year that will take that position). Imagine trying to run the U S Senate where you have a 90-10 vote, but the measure still doesn\’t pass!… but that\’s precisely what can happen on national issues with 50 States voting. That alone, is total nonsense, and makes it pretty clear that federal oversight it sorely needed.
Why do we have state boundries? Why do the colleges of Ohio fevorently battle those of Michigan? Why do we have different license plates on cars registered in different states? Why are there different tax rates in each state, etc, etc, etc…
This seems foolish, we are all Americans, WHY DON\’T WE JUST CREATE A UNITED STATE OF AMERICA?
I\’m all for it… States of America, TEAR DOWN THOSE WALLS! Then the next time you are asked where did ya come from, you can say: Im from the UNITED STATE OF AMERICA. Our forfathers were a bit antequated. They thought that the best way to solve problems was with FREEDOM and AUTONOMY and to do so at the MOST LOCAL LEVEL, not necessarily an OVERPOWERING & CONTROLING FEDERAL GOVERNMENT. Now that we have been \”enlighted\” we realize that our founding fathers were \”old fashioned\” with their inferior intelect that only reaches as far as COMMON SENSE…
Do I have to go on any further, I hope you have found the satire here against those that would support federal regulation. If not, here is an anology that might help:
If I have a problem in my own back yard, the first person to complain about it, and demand that it be cured, would be my next door neighbor, not the folks that live accross town, or, for that matter, in another state.
Federal regulation of an industry that is so regionally specific is just another excuse for BIGER GOVERNMENT. Not in my back yard!
Spud
I appreciate Mr. Symington\’s comments and want the Insurance Journal\’s audience to be aware that we share many of the same concerns about the problems of state insurance regulation. We also agree that most of the solutions to what ails the state regulatory system will be found in Washington, D.C.
For example, the Big I’s proposal to modernize state insurance regulation is to have Congress enact a series of uniform national insurance standards and then require the states to enforce them. The SMART Act proposal would do exactly that. By definition, a national standard preempts state regulation completely. This would achieve commonality of regulation across jurisdictions but removes the ability of individual states to exercise discretion in their insurance laws. We think the legislation introduced by Senator John Sununu and Senator Tim Johnson offers a more even handed approach.
The proposed National Insurance Act (S.2509) would create a new federal system and leave the state system completely intact. Whereas creating national standards achieves regulatory uniformity by replacing state regulation, establishing an Optional Federal Charter would leave state regulation intact. For insurers and insurance agents that wish to choose it â€â€Ŕ and pay for it â€â€Ŕ an Optional Federal Charter achieves uniformity by establishing one set of federal rules not by preempting state rules.
This is not a message I saw reported in the Journal.
The message I did see reported was misleading and unfortunately wrong. For example, according to Mr. Symington , “\”With the creation of a new Office of National Insurance in downtown Washington, D.C., agents would lose the capability of communicating with the state regulator and his or her staff, whom you may know personally from many years of business.”
I can find no other way to describe this statement as other than fear-mongering.
The Sununu/Johnson bill authorizes a federally licensed agent to sell insurance for any company, whether state or federally chartered. At the same time, S. 2509 does not require a state-licensed agent to obtain a federal license. S. 2509, therefore, does not impede the ability of a state licensed agent to sell the products of a federally licensed insurer in any state for which the state licensed agent holds a license.
The legislation was drafted in this fashion expressly for agents concerned about having to obtain a federal license. The legislation makes it possible for an agent licensed in Mississippi to sell exactly the same array of products, from either a state or federally licensed insurer, as a federally licensed agent. This kind of competitive parity is important and ensures that state licensed agents and federally licensed agents will compete for business on a level playing field.
How creating a competitively neutral agent licensing mechanism as part of an Optional Federal Charter bill impedes an agent’s ability to call Commissioner Dale is, therefore, a mystery to me.
The Journal also reports that Mr. Symington thinks “Regulators would not have the power to review [insurance] the forms.” I think this may be inaccurate reporting. Mr. Symington is a lawyer and a good one. I’m sure he has read S. 2509 and would not have missed the sections of that bill describing the power of the National Insurance Commissioner to establish criteria for insurance policies, the obligation to examine national insurers to make sure that both the policies and the sale practices under which the policies are offered comport with federal regulation, and the penalties that apply if the regulations are not followed.
Lastly, the Journal reports that Mr. Symington is worried an agent will be confused by the difference between their state’s regulation and federal regulation. Well. There are 56 U.S. insurance jurisdictions and those of us who have represented national clients in our careers have had to contend with all of them at one point or another and sometimes, simultaneously. I agree completely: the state insurance system is enormous, disparate and quite confusing.
That’s why Senator Sununu and Senator Johnson are proposing the creation of an Optional Federal Charter establishing one set of federal rules that will apply nationwide.
There should be nothing confusing about that.
J. Kevin A. McKechnie
Chairman
The Optional Federal Charter Coalition
Director of Government Relations
The American Bankers Insurance Association