On November 5, the House Financial Services Committee's Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises held a hearing on reforming insurance regulation. Members of the panel expressed impatience with the pace of efforts by state regulators to modernize the current system of state regulation. Subcommittee Chairman Rep. Richard Baker (R-Louisiana) said insurance regulation could be the subject of congressional action next year, but also indicated an agreement could be reached on a way for state and local reform initiatives to achieve changes. Baker said there should be a timeline for state insurance regulatory reform.

Subcommittee members discussed the idea of creating an optional federal charter for insurers. Rep. Spencer Bachus (R-Alabama) expressed concern that optional federal charter proposals could reduce state revenues and prove undoable from a practical political standpoint.

National Association of Insurance Commissioners (NAIC) President Mike Pickens testified about the NAIC's regulatory modernization action plan adopted in September and endorsed by the National Conference of Insurance Legislators (NCOIL) and the National Conference of State Legislatures (NCSL). Pickens said the plan will make regulation more effective and efficient, less costly and less burdensome. Pickens also noted that state regulators are "on time and on target to accomplish the changes needed."

Pickens asked the panel to continue to support states' efforts to improve the existing state-based system. He said most of the support for an optional federal chartering system is coming from the largest banks and life insurance companies, while three of the four major carrier property/casualty trade associations favor state regulation. Summary of Mike Pickens' testimony

What It Means to Agents: PIA supports state-basedfunctional regulation of insurance that balances the need for national uniformity in standards and the demands of emerging multi-state markets, within the framework of functional state regulation. PIA is opposed to a federalized insurance oversight system, optional federal charters as part of a dual regulatory system, or an exclusive state-only regulatory system.