Yesirree insurance folk…things? They are a’ changin’! Maybe…
Senators John Sununu (R-NH) and Tim Johnson (D-SD) have introduced SB 2509 to the Senate. The bill, entitled the National Insurance Act of 2006 will establish (if passed) the “Office of National Insurance” which will be housed in the Department of the Treasury. Scared yet? Read on for more!
The official language in the bill’s title reads: “A bill to authorize the issuance of charters and licenses for carrying on the sale, solicitation, negotiation and underwriting of insurance or any other insurance operations, to provide a comprehensive system for the regulation and supervision of National Insurers and National Agencies, to provide for policyholder protections in the event of an insolvency or impairment of a National Insurer, and for other purposes.”
Wait a minute…lemme see…DON”T WE ALREADY HAVE THAT STUFF??? We would call it, hold on…the state insurance divisions! Here’s what the bill would do if it becomes law:
- It would establish the office of the National Insurance Commissioner
- Within the office of the Commissioner, there would be three divisions:
- Division of Insurance Fraud
- Division of Consumer Affairs
- The Office of the Ombudsman which will act as a liasion between the Office and any person adversely affected by the Office’s supervisory/regulatory activities
- Prescribes guidelines for
- the examination of National Insurers and National Agencies
- examination fees and other assessments
- Disclosure standards
- Removes National Insurers, National Agencies and federally licensed insurance producers from state oversight of insurance business practices
- Retains the applicability of certain state laws, including taxation and escheat
- Subjects violations of this Act to civil and criminal penalties
- Permits cooperation between the Commissioner and other foreign or state commissioners
- Grants the Commissioner investigative authority regarding insurance fraud
- Provides for federal licensing and oversight of insurance producers
- Prescribes implementation guidelines for national insurance participation in guaranty associations and establishes the National Insurance Guaranty Association to provide benefits to policyholder of a National Life Insurer placed in federal receivership
This does not mean that every producer is required to obtain a “federal insurance license” at all. From what I can determine, this will be a voluntary situation for insurers and producers. In other words, we will still be able to maintain state licensure and state authorization for producers and insurers. I believe that carriers that sell nationwide would be more interested in this legislation, and not generally the smaller regional carriers.
The idea is that National Insurers would only have to submit their filings to a single entity as opposed to 50+ state insurance divisions. For producers, a federal license would authorize the producer to sell nationally, and would eliminate the idea of resident and non-resident licensing requirements. Once concern: nowhere in the legislation did I see any mention of how testing, etc. will actually work! Minor issue… As well, doesn’t say anything about continuing education either and who will mandate that area. Hunch is that it’s going to be the individual states(?).
Take a minute and review the proposed legislation by clicking on the link highlighted above, and let me know what you think! This could change a few things out there. By the way, the current state insurance divisions and just about all governors oppose the legislation. That’s a surprise!