Life Agents, Background Information 

“The Commissioners are now fully prepared to go before their various legislative committees with recommendations for a system of insurance law which shall be the same in all States – not reciprocal, but identical; not retaliatory, but uniform.”

Statement expressing the desire for more uniform insurance regulatory system made by George W. Miller, NY Insurance Commissioner and founder National Association of Insurance Commissioners, at the close of the very first meeting of the NAIC in 1871

But still today, a provider and seller of insurance in multiple states is subject to separate regulation in each one of those states – a time consuming and painful process at best.  New forms and products must be approved by each state and each state must license every insurer and agent doing business in that state.  Multi-state securities firms and national banks that compete with insurers have only one regulator.

Furthermore, in today’s competitive financial services marketplace, it is critical that the insurance industry have its own federal advocate at the national level to serve as an expert insurance resource in Washington and internationally who can speak on behalf of the insurance industry.

Agents for Change is a trade association of insurance agents and brokers working together to reform insurance regulation and enact a national insurance charter to allow producers and insurers the option of being regulated at either the federal or the state level.  Agents for Change provides agents and brokers from across all lines of insurance an opportunity to participate in policy development and provides Members of Congress with expert advise as they move forward to modernize insurance regulation.

Benefits to Agents and Brokers

The choice of allowing insurers to obtain a national insurance charter can greatly benefit agents and brokers doing business in multiple states by:

1. Providing uniformity of regulatory standards
2. Increasing congressional and administration awareness and understanding of how insurance products serve critical family and business financial needs and support the nation’s economy
3. Bringing new products to the market more quickly

1. Providing uniformity of regulatory standards

  • Under a national insurance charter agent/broker licensing would be streamlined with a single Federal licensing standard and a single license that would allow qualified producers to do business in all states
  • Regulatory costs for life insurance products, annuities, long term care and the like would be reduced by having one policy form rather than the thirty or so different versions necessary today to do business in all states

2. Supporting the important role of life insurance in protecting families and businesses

  • The Federal tax code recognizes the important role that life insurance and annuity products play in protecting the financial well being of Americans
  • Yet, insurance is the only segment of the financial services industry that does not have a single national advocate to serve as an expert resource on insurance issues in which Congress and the Administration are involved and to provide a national perspective on issues of importance to the industry

3.  Bringing new products to market more quickly

  • Insurers would have the ability to quickly introduce innovative new products in response to customer demand  -- Agents and brokers are losing money due to the inability of insurers to get new products to market in a timely fashion
  • Insurers would be able to more effectively compete with other financial institutions who sell products serving the same consumer needs and who themselves are regulated by a single federal entity

Much as choice in the regulation of the banking industry (federal or state) has strengthened its system, the same could be expected for the insurance industry.

Benefits to Consumers

As we have seen in banking and securities, a federal agency can benefit consumers by:

1. Removing redundant regulatory barriers that stifle competition
2. Providing uniform and consistent insurance laws that apply in all 50 states
3. Protecting the special recognition given in our tax code to insurance products serving critical family and business financial needs

1. Promoting competition

  • The ability to timely provide the best products at the best price is impaired by the lack of uniformity and delays in the current 50 state insurance regulatory system, obstacles that national bank and security firm competitors do not face
  • Inefficiencies in the approval process in each state limit the variety of products that can be offered.  Insurers can only get products to market as fast as each state bureaucracy allows
  • National standards would also help consumers to understand and compare policies which will be uniform, nationally

2.  Providing uniform and consistent laws

  • Consumers dealing with a national insurer will enjoy the same availability of products and services in all 50 states
  • Consumers will have protections under the federal laws, no matter where they reside now or in the future
  • With a national insurance commissioner, a uniform system for background checks of agents and brokers company officers could be more quickly integrated with both state and federal regulatory and law enforcement databases

3.  Protecting consumer benefits so that Americans can achieve a financially secure retirement

  • A national insurance regulator will have an equal voice with federal bank and securities regulators in the development of federal policy, such as policyholder taxation, thereby protecting the interests of consumers of life insurance and annuities
  • A national insurance commissioner could have an important role in preserving the special recognition given in our tax code to insurance and annuity products serving critical family and business financial needs

The current system is cumbersome and limits the consumer’s options.  A national insurance charter will help lower costs through increased competition while enabling producers and insurers to bring more and better products to market in a timely fashion. 

For all of these reasons, we believe that modernizing insurance regulation is important to life insurance agents as well as the insurers they represent.  Please help educate your Member of Congress about a national insurance charter and the benefits it would offer.