NAIFA Lays Out Conditions for OFC Support

The National Association of Insurance and Financial Advisors (NAIFA) announced that it will back federal insurance regulation as long as certain conditions are met, such as ensuring that the proposal set forth to implement the optional federal charter system (OFC) offers agent choice, enhances consumer protection and does not destroy the existing state-based system, if they want the support of life insurance agents . 
 
A month after announcing its "conditional" support for an OFC, similar to that proposed by the National Insurance Act, NAIFA's board of trustees now is ready to spell out what those conditions are. Among the items the group insists upon are a prohibition on companies discriminating based on whether a producer chooses to be state-licensed or federally licensed, and that the federal regulator not demand producer compensation disclosures any more stringent than the model adopted in 2004 by the National Association of Insurance Commissioners. 
 
NAIFA President Jeffrey J. Taggart said the board's deliberations "take into account many of the concerns we have heard from…NAIFA members when discussing insurance regulatory reform," but insisted they not be read as drawing any conclusions about whether NAIFA's 60,000 members ultimately will support OFC when the question is put before NAIFA's National Council in September. 
 
After years of maintaining neutrality on the OFC question, NAIFA's board announced in April that it had chosen to recommend its membership grant conditional support for the concept (BestWire, April 14, 2007). The position marks a division between NAIFA and the Independent Insurance Agents & Brokers of America, which represents primarily property/casualty agents and long has been an OFC opponent. 
 
Earlier this month, NAIFA also announced its support for Insurance Information Act, introduced by Rep. Paul Kanjorski, D-Pa. The bill would create an Office of Insurance Information within the U.S. Treasury Department, tasked with monitoring developments in the insurance markets and serving as the primary federal voice in international insurance issues, including reinsurance collateral and trade negotiations. The measure closely resembles one plank of a comprehensive financial services regulatory overhaul offered by Treasury Secretary Henry Paulson. 
 
OFC opponents have looked to sway NAIFA members away from the pro-OFC plank in advance of the group's vote. In a recent statement, NAIC President Sandy Praeger predicted that "after considering the potential impact an OFC would have on their clients, NAIFA's members will surely agree that an optional federal charter combined with consumer protections is like oil and water — they simply do not mix, even with myriad caveats."