Trade Associations React to AIA’s Move Toward Federal Chartering

July 19, 2001

The Alliance of American Insurers expressed strong disagreement with the American Insurance Association’s (AIA) new position endorsing an optional federal chartering plan for property and casualty insurers.

Alliance President Rodger S. Lawson said the Alliance was particularly disappointed with this shift in AIA’s position in light of the fact that the two organizations have historically worked together to improve the state regulatory system. He also expressed hope that this would not lead to a future abandonment of those efforts.

Lawson further stated that the Alliance and its member companies do not share the view the federal government would be a more benign regulator or that total federal preemption is a reasonably obtainable objective. He said the Alliance believes there would be additional political costs that are not clearly understood. Lawson added that once a majority of insurance companies fully realize the ramifications of the federal chartering initiative, the Alliance is confident those companies will oppose it.

The Alliance remains a strong proponent of the concept of functional regulation as articulated in the Gramm-Leach-Bliley Act. Modernized state regulation is the best approach to serving the needs of insurers and consumers in a fair and balanced manner.

The full text of the Alliance’s earlier statement on dual chartering is available on its web site at www.allianceai.org.

The National Association of Independent Insurers (NAII) also commented of the AIA’s announcement of its board’s endorsement of a federal chartering plan for property/casualty insurers and the Alliance’s opposition to that move.

In terms of the NAII’s position on the issue of state versus federal insurance regulation, the association stated that for the record NAII:

* Supports state regulation of insurance;

* Understands that state regulation must improve and is actively working with state regulators and legislators to enact such improvements;

* Opposes federal encroachment into insurance regulation;

* Believes that Congress must give states ample time to improve state regulation;

* Is carefully studying other options, including the AIA proposal, with an open mind.

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