N.Y. Agents Hit Dual Charters

To The Editor:

The Independent Insurance Agents Association of New Yorkstrongly opposes recent proposals to create a dual charter systemfor insurers, as advanced by the American Insurance Association,the American Bankers Association Insurance Association, and theAmerican Council of Life Insurance.

IIAANY supports the longstanding state regulatory system thatprotects consumers and oversees insurer solvency and agent/brokeractivity.

Proposals calling for an optional federal charter system do nottake into account the consumers interest. There is no clamoring forchanges in the current state-based system from any consumerquarter. In fact, the direct loss of state controls over insurersolvency, licensing and anti-fraud efforts may very well affectconsumers adversely.

Importantly, the proposed dual system would result in the“disenfranchisement” of the consumer to the extent thatpolicyholders now have a direct voice with state legislators overinsurance problems.

Further, insensitivity toward individual states insurance needsand underwriting environments is inherent in a federal system ofregulation. Each state is different, each has unique underwritingvariables. Local regulation is responsive to those particularfactors.

Under a dual-charter system, we may surely expect a loss of jobsand tax revenues, as insurers close local offices and consolidatetheir operations. This is bad for New York and for all states whereinsurers have significant economic impact.

The proposed optional federal charter system would forceindependent insurance agents to obtain two licenses (oneadministered by the state and another by the federal government) toaccommodate the different charters.

Additionally, a dual-charter system would create an unevenplaying field for insurance companies in the event the nationalapproach provides different methods of rating and form regulation,as well as differing procedures within which a national guaranteefund would operate.

A far better approach to the market problems that dual-charteradvocates seek to remedy would be a state-based system that resultsin common standards for company licensing, agent/broker licensingand education. Additionally, we believe state-based guaranty fundsshould operate in an identical manner.

The state regulatory system needs change, revision, andnurturing by regulators and state legislators. But to abandon auseful, highly workable vehicle is to waste taxpayer money and tomove accountability out of consumer reach.

Patrick C. Moore
President

Paul W. Babbitt
State NationalDirector
Independent Insurance Agents
Association of New York, Inc.
Syracuse, N.Y.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, September 10,2001. Copyright 2001 by The National Underwriter Company in theserial publication. All rights reserved.Copyright in this articleas an independent work may be held by the author.

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