AIA Lobbies Treasury Secretary for Creation of Optional Federal Charter |
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Written by U.S. Insurance News
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Wednesday, 21 November 2007 |
Saying that the current system of regulating the property-casualty industry “relies on discredited government price and product controls,” the American Insurance Association (AIA) recently sent a letter to Treasury Secretary Henry Paulson Jr. urging him to consider an Optional Federal Charter (OFC) for insurance regulation.
Saying that the current system of regulating the property-casualty industry “relies on discredited government price and product controls,” the American Insurance Association (AIA) recently sent a letter to Treasury Secretary Henry Paulson Jr. urging him to consider an Optional Federal Charter (OFC) for insurance regulation.
The OFC would be established in conjunction with Treasury Department’s preparation of a blueprint for an improved U.S. financial regulatory structure. The department’s blueprint is scheduled to be released early next year.
Treasury first announced its plans in June to review and recommend improvements to the way financial services is regulated. In early October the department asked for public comments.
Debra T. Ballen, AIA’s executive vice president for Public Policy Management, penned the letter to Secretary Paulson on behalf of the association, which represents approximately 350 major insurance companies that provide all lines of property-casualty insurance and write more than $123 billion annually in premiums.
Ballen wrote, “Our immediate imperative . . . is to reform the property/casualty insurance regulatory system by providing insurers with the option of federal regulation; we believe this is critical to the future vitality of our sector and is a necessary predicate to the consideration of any type of consolidated regulatory structure that ultimately might oversee insurers, national banks, and securities firms.”
Ballen points out in the letter that “the current insurance regulatory system has lost its focus on solvency and instead has evolved into a bureaucratic maze of government price and product controls, accompanied by complex and inconsistent rules regarding virtually all aspects of market conduct, many of which create cost and delay but do little to protect the consumer.”
She continues, “What’s needed is a fundamental restructuring of insurance regulation that addresses the market inefficiencies of government price and product controls, the non-uniform implementation of regulatory standards, and the structural barriers to a more holistic approach to the regulation of all U.S. financial services, one that will ultimately work to benefit and empower U.S. insurance consumers. We urge Treasury to develop an ambitious blueprint for regulatory modernization that includes as a linchpin OFC for property/casualty insurers.”
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