Illinois Insurance Director Michael McRaith predicts that an optional federal charter for insurers won’t happen. Speaking in Chicago October 23 to the annual conference of the National African-American Insurance Association (NAAIA), McRaith said “State insurance regulation is under attack, but an optional federal charter won’t happen.”

McRaith, who chairs the NAIC’s property-casualty insurance committee, compared the push by many large insurers for optional federal chartering to the credit card companies’ efforts to pass the Bankruptcy Reform Act of 2005. He noted that insurance is too unique and personal to be lumped in with other financial products—a fact recognized as far back as the Roosevelt administration. Even the regulation-minded Roosevelt administration “never touched insurance,” recognizing it as a local product, sold as an interstate transaction, and not traded on any public exchange, McRaith said. The 1945 passage of the McCarran-Ferguson Act, permitting state regulation of insurance and granting insurance an antitrust exemption, further solidified insurance as a product best regulated at the state level, he said.

Optional Federal Charter Won’t Happen (National Underwriter 10/23/09)

October 27, 2009