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Big "I" Opposes House Optional Federal Charter Bill

The Independent Insurance Agents & Brokers of America (the Big “I”) opposes the National Insurance Act of 2007 (NIA), introduced today by Rep. Melissa Bean (D-Ill.) and Rep. Ed Royce (R-Cal.).

Rather than creating a massive new federal bureaucracy under an Optional Federal Charter (OFC) bill, the Big “I” instead supports targeted federal legislation to reform the state insurance regulatory system, which relies on the over 100 years of skill and experience of states as insurance regulators. An example of such a pragmatic approach is H.R. 1065, the Nonadmitted and Reinsurance Reform Act of 2007, sponsored by Rep. Dennis Moore (D-Kan.) and Rep. Ginny Brown-Waite (R-Fla.), which passed the House by voice vote last month.  The legislation would help create uniformity in the surplus lines and reinsurance markets.

“We share the belief held by virtually every player in the insurance market that there needs to be reform of the existing regulatory system,” says Big “I” CEO Robert A. Rusbuldt.  “Change is overdue, and nearly everyone agrees that the existing system can be slow, inefficient, and duplicative.  The Big “I” supports the need to update the regulatory system, but creation of a new federal bureaucracy is not the answer.”

Although the need for greater efficiency and uniformity is clear, consumers and industry participants have many reasons for opposing OFC, including:

·         Local insurance regulation works best for consumers and the state system ensures a level of responsiveness to consumers that could not be matched at the federal level.

·         The dual state/federal system established by the NIA would be confusing to consumers and could create coverage gaps.

·         While addressing some of our members’ licensing concerns, the Big “I” believes the NIA would lead to additional regulatory burdens on agents and brokers and would negatively impact our members’ ability to represent their customers by establishing a distant federal regulator in Washington, D.C.

·         The dual structure established by the NIA could have disastrous implications for solvency regulation by largely bifurcating this key regulatory function from guaranty fund protection.

·         The NIA would negatively impact revenue through a loss of licensing fees and, potentially, state premium tax revenue – critical funding heavily relied upon by the states for various purposes.

·         The creation of a new, large federal bureaucracy could lead to new taxpayer burdens, less consumer protections, and a regulatory maze for both consumers and agents.

            “The NIA would create dual federal/state regulation as a substitute for the existing state-by-state system, which would heighten, rather than diminish, regulatory burdens on our membership and create confusion for the customers we serve,” says Charles Symington Big “I” senior vice president for government affairs and federal relations. “A new federal regulator located in Washington, D.C. brings a host of new problems, including unresponsiveness to market differences among the states.  The solution to modernizing insurance regulation is to reform the state-based system through targeted federal legislation not to create a cumbersome new federal bureaucracy.”

IIABA advocates for a pragmatic, middle-ground approach that uses targeted federal legislation to improve state insurance regulation by creating a more uniform and streamlined regulatory system. This approach would overcome state-level impediments to reform and build on, rather than dismantle, the states’ inherent strengths—diversity, geographical uniqueness, innovation and responsiveness to consumers—to meet the challenges of a rapidly changing insurance marketplace.

“Targeted reform of the state-based system such as the Nonadmitted and Reinsurance Reform Act is the appropriate remedy for the marketplace’s problems, and is the only solution that has gained broad industry and bipartisan support, as evidenced by passage of this bill by voice vote in the House last month,” says Tom Koonce, assistant vice president for federal government affairs.  “The Big “I” hopes that industry participants will support this approach to much-needed reform that will benefit consumers now,” Koonce concluded.  “We believe that speed to market, agent and company licensing, market freedom and other insurance regulatory concerns can be addressed efficiently and more expeditiously under this approach than under the creation of a new federal bureaucracy.”


Founded in 1896, IIABA (the Big “I”) is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, and health—as well as employee benefit plans and retirement products. Web address:


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fax: 703.683.7556

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