CCIA FAVORS PROPOSAL FOR OPTIONAL DUAL FEDERAL AND STATE REGULATION OF INSURANC

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Contact: William F. Burfeind
Executive Vice President
(312) 939-2242

Chicago, April 4, 2008 - The Consumer Credit Industry Association (CCIA), the historic trade representative of credit insurers, said today it favors a proposal by the U.S. Department of the Treasury to establish an Optional Federal Charter (OFC) for insurers in a system of dual federal and state regulation of the insurance industry.

On March 31, U.S. Treasury Secretary Henry M. Paulson, Jr. issued a comprehensive “Blueprint for A Stronger Regulatory Structure” outlining extensive proposals to modernize the regulation of capital markets in the face of the ongoing mortgage and credit crisis. It contains a proposal for an OFC for insurers and creation of an Office of National Insurance (ONI) within treasury headed by a Commissioner of National Insurance with sweeping federal regulatory authority. The proposed ONI would regulate insurers, reinsurers and insurance producers like brokers and agents.

“The notion of establishing federal regulation of the insurance industry has risen from time to time,” noted CCIA Executive Vice President William F. Burfeind, adding, “The CCIA would support a system of federal regulation providing it is optional so that insurers, like our members, clearly would have the option to accept federal regulation or to continue to be regulated by the states in which they do business.”

Burfeind observed that a system of optional federal regulation would bring the benefit of a single national licensing system that many insurers would welcome because despite expanding uniformity promoted by the National Association of Insurance Commissioners, the states have yet to agree on uniform limited licensing requirements for credit insurers.

“Ideally, federal insurance regulators might also provide for uniform policy and certificate forms as well,” said Burfeind, noting, “However even in such a case insurers would want to preserve their options if they deemed state regulation superior in this or other areas.”

He cited a current credit insurance regulatory issue as an example of how an OFC could streamline regulation. The CCIA favors establishment of a limited credit insurance producer license to be issued without examination or continuing education requirements tests.  The NAIC Producer Model Licensing Act adopted used by most states provides for this but it has not been uniformly applied adopted in all states. A single national standard would be preferable and would take precedence for insurers that opted to accept federal regulation.

Secretary Paulson’s blueprint acknowledges these kinds of issues, declaring, “Despite some progress, significant differences remain in insurance regulation across the states in terms of required approvals of policy forms, filing procedures, and allowable premium charges. The regulation of insurance needs to be modernized to keep the insurance sector competitive with other financial institutions.”

The blueprint observes that a modern, comprehensive insurance regulatory structure should enhance competition in both national and international markets, increase efficiency, encourage product innovation and provide the highest quality of consumer protection.“While it seems likely that the blueprint will move forward only slowly if at all this year, it is a starting point for discussion of comprehensive change to federal financial regulatory structures,” Burfeind said.

He concluded, “The CCIA will monitor the discussion and contribute comment and testimony as appropriate to state and federal regulators and legislators if and when steps are taken to move toward a system of optional federal insurance regulation paired on a dual track with the present system of state insurance regulation.”

Credit insurance and related debt cancellation products insure or otherwise provide for the repayment of debt in the event of an insured event like the death, disability or unemployment of the borrower or the loss of property purchased from the proceeds of an insured loan.