From Insurance Journal:
[T]wo U.S. senators today unveiled legislation that would allow life and property/casualty insurers to choose federal rather than state regulation under an “optional federal charter” system. United States Senators John Sununu (R-N.H.) and Tim Johnson (D-S.D.), both members of the Senate Committee on Banking, Housing, and Urban Affairs, introduced the comprehensive legislation - the “National Insurance Act of 2006″ - on Wednesday, April 5.[...]
The insurance industry has split over the advisability of creating a dual regulatory system with an optional federal charter. The life and financial services industry, some larger property casualty insurers and larger commercial insurance brokers generally favor the option while other property casualty insurers and independent agents oppose it.
I have mixed thoughts about this. As an actuary, such a measure would make parts of my job easier, you’d think — only having to deal with one regulatory body rather than 51 (give-or-take). Of course, depending on how implemented, such a measure could reduce the demand for actuaries in some respects.
I know that my colleagues at large insurers do a happy-dance at the idea of being (hopefully) lightly-regulated by only one entity. However…I’m not sure that it’s safe to assume that the federal body would regulate lightly. True, there is the precedent of the Comptroller of the Treasury, who has for decades acted more-or-less as a rubber-stamp for the banking industry when necessary to trump state legislation. And true, there is the perception that the current attitude in Washington is very business-friendly.
However, precedents don’t necessarily have to be followed, and political climates change. If you want to see folks in the home office of a large insurer turn a peculiar shade of green, ask them to ponder what the landscape would look like if the national insurance regulatory climate resembled Massachusetts’. Or, think about what it would be like to write auto insurance if Prop 103 existed countrywide.
On the other hand, if we could end up with less regulation, and where the U.S. insurance market were as dynamic as, say, Britain’s….wouldn’t that be fun!