BANKING ACT BRINGS INSURER PROTEST

The Independent Insurance Agents of America (IIAA) and the National Association of Insurance and Financial Advisors (NAIFA) expressed opposition to the draft National Bank Act, which was recently proposed by the American Bankers Association Insurance Association. In a joint letter to Michael G. Oxley, Chairman of the House Financial Services Committee, IIAA and NAIFA outlined their objections to the legislation. One of those was that it would result in the creation of two new federal charters for insurance companies and insurance agencies, respectively, and a new federal bureau to regulate the two new types of entities. The organizations maintained the legislation should be rejected to avoid the creation of a federal bureaucracy that would regulate the business of insurance. Secondly, they stated that while ABAIA had characterized its proposal as an “optional federal charter,” the obtainment of a federal charter would be wholly optional for insurers, but not for insurance agencies, under the draft Act. Despite their opposition to the legislation, IIAA and NAIFA indicated they would be supportive of a proposal that would offer strong incentives to states to create a national licensing and oversight system for insurers.