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New York Times Editorial Calls for Defeat of Optional Federal Charter

The New York Times has published an editorial calling for the defeat of legislation providing for an optional federal charter (OFC) for insurance carriers and...
May 22, 2009

The New York Times has published an editorial calling for the defeat of legislation providing for an optional federal charter (OFC) for insurance carriers and producers. Excerpts from the Times' editorial:

"There are many problems with state regulation of insurance - it is inefficient for insurers and inconsistently applied by the states - but it has done a good job ensuring the safety and solvency of insurance operations, something that can't be said about federal bank regulation."

"A.I.G.'s bailout is not an indictment of state regulation of insurance. It is a vindication of it, because the insurance businesses weathered the crisis relatively unscathed. Nor is it an argument for a license to choose one's regulator, because regulator-shopping got A.I.G. the overseer least equipped to rein in its risky dealings."

"At play here is the power of the insurance industry that has clamored for federal - weaker - regulation for nearly a decade. The industry, and its Congressional supporters, are trying to use the current upheaval to advance a predetermined agenda. The effort is disingenuous - and a shame." The editorial concludes that Congress and the Obama administration should stop the optional federal charter - and all forms of regulatory shopping - in their tracks.

What It Means to Agents:  This represents a major victory for organizations such as PIA and Main Street insurance agents, who have been the most steadfast supporters of state insurance regulation and opponents of a federal takeover. The New York Times editorial embraces the arguments we have been advancing for many years and reaches the same conclusion. We hope that this will go a long way toward stopping the OFC in its tracks.

Editorial - Regulator Shopping (New York Times 5/20/09) 

Times Attacks OFC Proposal (National Underwriter 5/21/09)