Life Insurance Industry Would Benefit From Optional Federal Charter
From catastrophe risk to consumer-directed healthcare to an optional federal charter, the insurance industry faces a number of critical issues in 2008. Executives from the industry associations that represent each insurance sector -- property and casualty, life, health, and reinsurance -- speculate
on the most urgent issues facing their lines of business in 2008 and provide insight into how technology can help meet those challenges.
Editor's note: This contributed commentary is part of a larger compilation on the financial outlook of the insurance industry. For links to the other guest commentaries, scroll to the bottom of the page.
The future of insurance regulation remains one of the most critical issues facing the life insurance industry. It affects our ability to respond to the needs of our customers and manufacture new products tailored to constantly changing economic circumstances, offer our products at the lowest possible cost, and compete with banks and securities firms that also provide asset management products and services to consumers. The current state-by-state regulatory system no longer should be the sole regulatory structure for the life insurance industry. The financial protection needs of consumers do not vary from state to state, and neither should the rules governing insurers and producers.
Unfortunately, highly valued and well-tested retirement security products that are available in one state may not be available just across the border simply because of unnecessary delays in product approval. While federally regulated banks and securities firms can gain regulatory approval to bring new products to market nationally within 60 days, it can take life insurers two years to gain the approval of all 51 insurance regulatory authorities. And the system is costly. A recent study estimated that life insurers could save more than $5.7 billion annually if they functioned under a single regulator as opposed to the current system, and most of these savings will be passed on to consumers in terms of lower premiums.
That is why the life insurance industry strongly supports federal legislation that would allow companies to choose either to remain state-regulated or come under the authority of a new national insurance regulator. Optional federal chartering means streamlined regulation, not lax regulation.
P&C Industry Focuses on Catastrophe Issues
-- By David A. Sampson, President & CEO, Property Casualty Insurers Association of America
Health Insurance Industry Seeks Broader Coverage
-- By Karen Ignagni, President & CEO, America's Health Insurance Plans
Reinsurers Address Natural Catastrope Risk
-- By Frank Nutter, President, Reinsurance Association of America
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