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NEWS RELEASE
April 2, 2009
ABA Media Contact: Jonathan Snowling
(202) 663-5468
E-mail: jsnowlin@aba.com
ABA AND ABIA SUPPORT OPTIONAL FEDERAL CHARTER
LEGISLATION PROPOSED IN THE HOUSE
WASHINGTON - The American Bankers Association and American Bankers Insurance Association endorsed legislation introduced today by Reps. Melissa Bean (D-IL) and Ed Royce (R-CA) to reform insurance regulation through the creation of an optional federal insurance charter.
The National Insurance Consumer Protection Act of 2009, would address inefficiencies built into the current state-by-state regulatory structure that prevent many companies and agents from fully meeting consumers’ financial needs by allowing insurers, reinsurers and agents to obtain a federal charter to better serve consumers.
“The Bean-Royce bill represents much-needed reform of insurance regulation,” said Edward Yingling, ABA president and CEO. “This legislation will allow insurance companies and agents to better serve their policyholders and increase America’s global competitiveness.”
Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner have both voiced their support for an optional federal charter in recent weeks.
Speaking before the House Financial Services Committee last month, Chairman Bernanke backed the call for creating an OFC, saying “it would be a useful idea.” Bernanke went on to urge Congress to contemplate the value of an OFC saying that this is “a direction worth giving serious consideration.”
Echoing this sentiment in testimony before the House Financial Services Committee last week, Treasury Secretary Timothy Geithner offered his support, saying there was a "good case" to be made for allowing insurance companies to choose between federal or state regulation.
Consensus for an OFC has increasingly picked up steam following the failure of the current state-by-state regulatory system to prevent the problems at insurance giant AIG from becoming a systemic risk to the national economy.
“The current financial crisis has taught us that insurance markets are national and even global in scope,” said Kevin McKechnie, executive director of ABIA. “Establishing a federal insurance regulator for those entities that require the efficiency a single set of rules provides will no doubt mean more choices for consumers, lower prices and stronger safeguards.”
Under current law, insurance providers must follow disparate—sometimes conflicting—regulations in each state in which they operate. Insurers face obstacles such as inconsistent regulations, barriers to innovation, conflicting agent licensing and education requirements, among others. All of these factors drive up the price of products and slow down innovation and delivery of new products to consumers.
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The American Bankers Association brings together banks of all sizes and charters into one association. ABA works to enhance the competitiveness of the nation's banking industry and strengthen America’s economy and communities. Its members – the majority of which are banks with less than $125 million in assets – represent over 95 percent of the industry’s $13.6 trillion in assets and employ over 2 million men and women.
The ABIA was created in 2001 through the combination of the American Bankers Association Insurance Association and the Association of Banks-in-Insurance. ABIA is a separately chartered affiliate of the American Bankers Association and is the only Washington, D.C. based full-service association for bank-insurance interests. ABIA can be found on the Internet at http://www.theabia.com.
ABIA and ABA are members of the Optional Federal Charter Coalition. The OFCC represents a large coalition of trade associations united to promote a modernized insurance regulatory system. Other members include Agents for Change, American Council of Life Insurers, American Insurance Association, The Council of Insurance Agents and Brokers, The Financial Services Forum, The Financial Services Roundtable, the Life Insurers Council, the National Association of Independent Life Brokerage Agencies and the Reinsurance Association of America. For more information on an OFC please visit the OFC coalition website at www.ofccoalition.com
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