The National Association of Insurance Commissioners (NAIC) is urging the 225,000 members of the National Association of Insurance and Financial Advisers (NAIFA) to overrule their Board of Trustees and continue to oppose optional federal charters for insurers.

“NAIFA has been a long-standing supporter of the NAIC and the state-based system of insurance regulation. So, we are certainly surprised and disappointed that NAIFA’s board would suddenly change course on this important consumer-protection issue — especially without the benefit of having the full feedback and support of its members,” said NAIC President Sandy Praeger in a statement.

“Considering that this measure still needs to be voted on by the NAIFA membership at large — and the governing board’s decision refers to certain conditions that would need to be satisfied — we remain hopeful that NAIFA’s membership will ask its board to reconsider its position,” Praeger said.

NAIFA said it would grant “conditional” support to the concept of an optional federal charter system, while also retaining support for state-based regulation. The recommendation by NAIFA's Board of Trustees, disclosed in an April 11 letter from President Jeffrey J. Taggart to the group’s National Council, follows an extensive review period by the group in which it was joined by the Property Casualty Insurers Association of America as among the few major insurance trade groups not to take an affirmative stance for or against the OFC concept.

The group’s support for OFC remains contingent on “several conditions,” Taggart wrote, while noting that those conditions are “still being finalized” by the Policy Formation Subcommittee. Insurance regulatory reform, he wrote, “is an extremely complex topic and requires thorough deliberation.”

“Insurance agents and financial advisors’ primary responsibility is to their clients, helping them make sound financial decisions that are in their best interest,” the NAIC statement from Praeger continued. “As such, NAIFA’s members represent an important link between insurance companies and consumers. After considering the potential impact an OFC would have on their clients, NAIFA’s members will surely agree that an optional federal charter combined with consumer protections is like oil and water — they simply do not mix, even with myriad caveats.”

NAIC Urges NAIFA Members to Vote For Consumer Protection (NAIC 4/18/08)

April 22, 2008