Any agency that operates to serve its clients in multiple states understands that the current licensing system is designed primarilly to generate revenues for states and to make it more difficult to represent those who wish to retain your services beyond the state line of your home state, rather than insuring competence in the practice of insurance.
This fact is especially so where in order to serve your clients, you must, in addition to securing a non-resident license, register your firm with the Secretary of State (fees) appoint a commercial entity to receive service of process (more fees) and register or license your firm (still more fees). It is an antiquated, anti-competitive system that does not serve the public nor us well. I would opt for a federal charter for my firm immediately, if available.
Great Post above. The opponents of an Optional Federal Charter are trying to shielf themselves from competition. It is no coincidence that opponents are primarily single state agencies and small regional carriers who have the most to lose from increased competition. They cry wolf that the passage of the act would increase their regulatory burden, but the bill makes it 100% clear they can completely opt out of federal regulation and remain state regulated.
We hae tracked this bill from the beginning and if the insurance companies are allowed to ignore state law and go with federal law then why should they have to pay taxes in the state. Most states rely on the millions of dollars of taxes paid by the insurance companies. The federal gov’t does not have a good track record of making things better (ie: deregulation of energy).
So when an insured has a problem with an insurance company who is not treating them the way they want who do you think would give them better help, a federal help line or the state dept. of insurance who handles a smaller work load. I love the idea that the federal gov’t is a cure all but it feels like the states are slowly losing their power. I guess time will tell and maybe it will work out for the better.
According to the proposed bill and Senate testimony, states would not lose any revenue. In other words, companies/agencies would still have to pay state taxes and fees. I’m not sure how that is possible since they will also have to pay a federal fee if they opt for a federal charter.
In general, I agree that the federal gov’t has a track record of messing things up. However, comparing this to the energy dept.? It makes more sense to me to compare it to the banking industry, which has dual regulating agencies (federal and state). Most people would agree that this system has been very successful. The OCC (federal banking regulator) is the model they are tailoring the “National Insurance” Office after. It is because of this, I feel the proposed bill is a good idea. Contrary to what some people are saying, the federal gov’t has a GREAT track record of regulating in the financial services industry. Why not include insurance?!
Bobcat: I do see what you mean and I hope this is as successful as the baking industry. About the taxes though the insurance companies will have to pay taxes only in the state of domicile. For example Walmart, they have locations in every state and currently they are paying taxes in every state for the portion of the risk in those states. With this bill they will only have to pay tax in the state they are domiciled out of which I am pretty sure it is Bentonville, AR. AR will then have the choice to share the tax money with the other states. The smaller states who rely on large companies from out of state to bring business to them will be out all of those taxes and when you are talking about tax on billions of dollars of premiums nationwide it adds up. Some of the states might share the money but my guess is that most of them won’t as it would be a huge headache figuring out how much to share with each state.
having a federal charter will work well for a while, until the big boys use their financial power to force out and buy out the competition. this will happen slowly, one regional carrier at a time, until the few remaining insurance companies are so big and powerful that they can swoop in and gobble up the few remaining regional carriers. then the market is theirs and there is not a politician alive that could afford to cross the giants left. 10 years ago i was able to shop around for the cheapest loan rate available. then all the regional banks were bought out or forced into mergers. quess what-i can no longer shop for the cheapest interest rates, either for loans or savings. the national banks now tell me what i can do. with a national charter like they are proposing, the same thing will happen to insurance. as others have said here, beware of the federal govt, they have a lousy track record. the bigger the company the more power they wield and our children will suffer. the loss of freedom to choose is a slow, gradual loss, but it is still a loss.
I can’t find any information about this. Does anybody know the bill number?
“the so-called optional federal charter bill that proposes letting insurance companies choose federal over state regulation.”
How about letting insurance companies choose no regulation?
Any agency that operates to serve its clients in multiple states understands that the current licensing system is designed primarilly to generate revenues for states and to make it more difficult to represent those who wish to retain your services beyond the state line of your home state, rather than insuring competence in the practice of insurance.
This fact is especially so where in order to serve your clients, you must, in addition to securing a non-resident license, register your firm with the Secretary of State (fees) appoint a commercial entity to receive service of process (more fees) and register or license your firm (still more fees). It is an antiquated, anti-competitive system that does not serve the public nor us well. I would opt for a federal charter for my firm immediately, if available.
Great Post above. The opponents of an Optional Federal Charter are trying to shielf themselves from competition. It is no coincidence that opponents are primarily single state agencies and small regional carriers who have the most to lose from increased competition. They cry wolf that the passage of the act would increase their regulatory burden, but the bill makes it 100% clear they can completely opt out of federal regulation and remain state regulated.
We hae tracked this bill from the beginning and if the insurance companies are allowed to ignore state law and go with federal law then why should they have to pay taxes in the state. Most states rely on the millions of dollars of taxes paid by the insurance companies. The federal gov’t does not have a good track record of making things better (ie: deregulation of energy).
So when an insured has a problem with an insurance company who is not treating them the way they want who do you think would give them better help, a federal help line or the state dept. of insurance who handles a smaller work load. I love the idea that the federal gov’t is a cure all but it feels like the states are slowly losing their power. I guess time will tell and maybe it will work out for the better.
According to the proposed bill and Senate testimony, states would not lose any revenue. In other words, companies/agencies would still have to pay state taxes and fees. I’m not sure how that is possible since they will also have to pay a federal fee if they opt for a federal charter.
In general, I agree that the federal gov’t has a track record of messing things up. However, comparing this to the energy dept.? It makes more sense to me to compare it to the banking industry, which has dual regulating agencies (federal and state). Most people would agree that this system has been very successful. The OCC (federal banking regulator) is the model they are tailoring the “National Insurance” Office after. It is because of this, I feel the proposed bill is a good idea. Contrary to what some people are saying, the federal gov’t has a GREAT track record of regulating in the financial services industry. Why not include insurance?!
Bobcat: I do see what you mean and I hope this is as successful as the baking industry. About the taxes though the insurance companies will have to pay taxes only in the state of domicile. For example Walmart, they have locations in every state and currently they are paying taxes in every state for the portion of the risk in those states. With this bill they will only have to pay tax in the state they are domiciled out of which I am pretty sure it is Bentonville, AR. AR will then have the choice to share the tax money with the other states. The smaller states who rely on large companies from out of state to bring business to them will be out all of those taxes and when you are talking about tax on billions of dollars of premiums nationwide it adds up. Some of the states might share the money but my guess is that most of them won’t as it would be a huge headache figuring out how much to share with each state.
having a federal charter will work well for a while, until the big boys use their financial power to force out and buy out the competition. this will happen slowly, one regional carrier at a time, until the few remaining insurance companies are so big and powerful that they can swoop in and gobble up the few remaining regional carriers. then the market is theirs and there is not a politician alive that could afford to cross the giants left. 10 years ago i was able to shop around for the cheapest loan rate available. then all the regional banks were bought out or forced into mergers. quess what-i can no longer shop for the cheapest interest rates, either for loans or savings. the national banks now tell me what i can do. with a national charter like they are proposing, the same thing will happen to insurance. as others have said here, beware of the federal govt, they have a lousy track record. the bigger the company the more power they wield and our children will suffer. the loss of freedom to choose is a slow, gradual loss, but it is still a loss.
Isn’t that the truth.