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Both insurer and agent groups have reacted positively to U.S. Rep. Michael Oxley‘s recent proposal to give the federal government sweeping new powers to oversee how states regulate the insurance industry.
Oxley, an Ohio Republican who chairs the House Financial Services Committee, told a meeting of the National Association of Insurance Commissioners (NAIC) that he and Louisiana Republican Richard Baker had formulated a proposal to craft legislation that would set targets for the states to meet on producer licensing, speed-to-market, price controls and more.
Oxley said the eventual bill would not include an optional federal charter or direct national regulation of insurance — there would be no U.S. insurance commissioner.
The Independent Insurance Agents & Brokers of America was quick to tout the proposal, which it said mirrors the “middle ground” approach it has favored since last year.
“This proposal articulated by Chairman Oxley is in line with the Big ‘I’ philosophy on insurance regulation,” said IIABA lobbyist Charles E. Symington Jr. in a statement. “The proposed plan will vastly improve the state oversight system while retaining its best features. It will accomplish these necessary reforms without creating a costly, ‘one-size-fits-all’ federal bureaucracy. IIABA will work diligently on the Hill and within the industry to mobilize support for this plan.”
Oxley noted four major areas the legislation would target for improvement: speed to market, producer licensing, company licensing, market conduct and price controls. The goal would be to make the state regulatory system more uniform, reciprocal, efficient and effective.
The Council of Insurance Agents and Brokers, which represents large commercial brokers, said it “heartily embraces” the proposal.
“While our association fully supports the concept of an optional federal charter for insurers, we don’t believe that the perfect should become the enemy of the good,” said the Council’s president, Ken Crerar. “The proposals offered by Chairman Oxley are better than good. They would build upon state-based efforts, and they provide both carrots and sticks for states to effectively respond.”
The National Association of Mutual Insurance Cos. (NAMIC) also applauded the proposal.
“[We have] long contended that state regulation should be reformed, that it can be accomplished in the state capitols, and strongly opposes federal regulation,” said David A. Winston, NAMIC
federal affairs vice president. “The reforms that Chairman Oxley put forth on Sunday will allow insurance regulatory reform at the state level to happen while making it a more effective and efficient system. [We are] encouraged by Chairman Oxley’s remarks, and are exceptionally pleased that he does not see the basis for a federal regulator.”
NAMIC also took credit for Oxley’s proposal, saying it was highly consistent with a policy paper it published in 2002. Oxley has taken the lead on a number of prominent financial services industry issues in recent years. Most famously, his name is associated with the Sarbanes-Oxley legislation aimed at curbing corporate accounting and ethical abuses. He was also pivotal in passing the Terrorism Risk Insurance Act.
Richard Baker, who will co-sponsor the bill with Oxley, is the chair of House Financial Services’ Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.