The Association for Advanced Life Underwriting says it supports the concept of optional federal charter legislation that would give producers and insurers a choice between federal or state licensing and regulation.
After evaluating the advantages and risks of letting insurers choose between state and federal regulation, the AALU believes the advantages prevail, the AALU says.
Rep. Ed Royce, R-Calif., drew attention to the optional federal charter concept Sept. 28, when he introduced H.R. 6225, the National Insurance Act of 2006.
In a statement to members, the AALU, Falls Church, Va., says it "could be helpful for producers and clients to have a federal regulator with expertise on life insurance issues who has the same kind of credibility with Congress and the administration that the Office of the Comptroller of the Currency has on banking issues."
On the other hand, the primary risk of OFC legislation is that "federal regulation of life insurance has not yet been tried and there could be significant harm if poor regulation results," the AALU says.
"AALU does not currently believe this is likely, but it is important that risk be mitigated by the specifics of the national regulatory structure that is created and by ongoing regulatory choice for life insurance producers and carriers," the AALU says.
The American Council of Life Insurers, Washington, is supporting the idea of OFC legislation.
The National Association of Insurance and Financial Advisors, Falls Church, Va., is staying neutral.
