Optional federal charter

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Optional Federal Charter(OFC) is a proposal to streamline and simplify US insurance regulation by allowing insurance companies to choose between a current state-based regulatory system and a single federal regulatory agency. This would mean that insurance companies would be regulated something like banks: they could choose either a state charter or a federal one. The proposed new federal regulatory system would be housed within the United States Department of the Treasury. Treasury Secretary Henry Paulson came out in favor of an Optional Federal Charter on March 31, 2008. [1]

Insurance equitable transfer of the risk of a loss, from one entity to another in exchange for payment

Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss

United States Department of the Treasury United States federal executive department

The Department of the Treasury (USDT) is an executive department and the treasury of the United States federal government. Established by an Act of Congress in 1789 to manage government revenue, the Treasury prints all paper currency and mints all coins in circulation through the Bureau of Engraving and Printing and the United States Mint, respectively; collects all federal taxes through the Internal Revenue Service; manages U.S. government debt instruments; licenses and supervises banks and thrift institutions; and advises the legislative and executive branches on matters of fiscal policy.

Henry Paulson 74th United States Secretary of the Treasury

Henry Merritt "Hank" Paulson Jr. is an American banker who served as the 74th Secretary of the Treasury. Prior to his role in the Department of the Treasury, Paulson was the chairman and chief executive officer (CEO) of Goldman Sachs. He is now the chairman of the Paulson Institute, which he founded in 2011 to promote sustainable economic growth and a cleaner environment around the world, with an initial focus on the United States and China.

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Groups on both sides of the issue have offered numerous arguments for and against the concept. Proponents promise a freer, more open market for insurance that would benefit consumers, increase product innovation, and help the economy. Opponents, on the other hand, believe that a new federal regulator will impose burdensome bureaucratic rules, squelch competition, and needlessly increase federal power. [2]

Larger insurance companies which operate in multiple states favor the proposal, [3] saying it would cut industry-wide costs by billions per year without reducing consumer protections and encourage free-market competition for insurance on the national level. They also say that the current state-run regulatory system makes it more difficult for insurers to bring innovative products to the market, and consumers are the ones who ultimately pay the price for the inefficiencies of the state-run regulatory system through higher prices. Groups that support an OFC include Agents For Change, the American Insurance Association, the United States Chamber of Commerce, and a variety of free-market groups such as the Competitive Enterprise Institute and FreedomWorks. [4] Both the 2007 Bloomberg-Schumer Report [5] and the Financial Services Roundtable’s Blue Ribbon Commission on Mega Catastrophes [6] have called on Congress to enact Optional Federal Charter legislation.

Founded in 2005, Agents For Change is a grassroots trade association of over 8,500 insurance agents and brokers from across all lines of insurance working together to enact an optional federal charter to allow producers the option of being regulated at either the federal or state level. Members of Agents for Change participate in policy development and provide lawmakers with expert advice as they move forward to modernize insurance regulation. An optional federal charter could revolutionize the way insurance agents and brokers across America conduct business.

The American Insurance Association (AIA) is an insurance industry trade association representing about 300 insurance companies that provide property insurance and/or casualty insurance in the United States.

United States Chamber of Commerce Chamber of Commerce in the USA

The United States Chamber of Commerce (USCC) is a business-oriented American lobbying group.

Opponents contend that insurers want an OFC because the current federal OFC bills would largely end the state practice of overseeing—and in some cases setting—the particular rates that insurance companies charge. Groups like the Consumer Federation of America argue that this process of government rate setting tends to provide lower prices for consumers. Opponents also argue that the state-based system does a more efficient job responding to local consumer needs and desires.

The Consumer Federation of America (CFA) is a non-profit organization founded in 1968 to advance consumer interests through research, education and advocacy.

Groups in Favor

The Competitive Enterprise Institute (CEI) is a non-profit libertarian think tank founded by political writer Fred L. Smith Jr. on March 9, 1984, in Washington, D.C., to advance principles of limited government, free enterprise, and individual liberty.

FreedomWorks is a conservative and libertarian advocacy group based in Washington D.C., United States. FreedomWorks trains volunteers, assists in campaigns, and encourages them to mobilize, interacting with both fellow citizens and their political representatives. It is widely associated with the Tea Party movement.

Groups in Opposition

The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. NAIC members, together with the central resources of the NAIC, form the national system of state-based insurance regulation in the U.S. The NAIC is an Internal Revenue Code Section 501(c)(3) non-profit organization. The 2018 NAIC President is Julie Mix McPeak, insurance commissioner from the Tennessee Department of Commerce & Insurance.

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Federal Deposit Insurance Corporation company

The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation providing deposit insurance to depositors in U.S. commercial banks and savings institutions. The FDIC was created by the 1933 Banking Act, enacted during the Great Depression to restore trust in the American banking system. More than one-third of banks failed in the years before the FDIC's creation, and bank runs were common. The insurance limit was initially US$2,500 per ownership category, and this was increased several times over the years. Since the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2011, the FDIC insures deposits in member banks up to US$250,000 per ownership category.

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The Terrorism Risk Insurance Act (TRIA) is a United States federal law signed into law by President George W. Bush on November 26, 2002. The Act created a federal "backstop" for insurance claims related to acts of terrorism. The Act "provides for a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism." The Act was originally set to expire December 31, 2005, was extended for two years in December 2005, and was extended again on December 26, 2007. The Terrorism Risk Insurance Program Reauthorization Act expired on December 31, 2014.

Office of Thrift Supervision

The Office of Thrift Supervision (OTS) was a United States federal agency under the Department of the Treasury that chartered, supervised, and regulated all federally chartered and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of another federal agency. Like other U.S. federal bank regulators, it was paid by the banks it regulated. The OTS was initially seen as an aggressive regulator, but was later lax. Declining revenues and staff led the OTS to market itself to companies as a lax regulator in order to get revenue.

An insurance score – also called an insurance credit score – is a numerical point system based on select credit report characteristics. There is no direct relationship to financial credit scores used in lending decisions, as insurance scores are not intended to measure creditworthiness, but rather to predict risk. Insurance companies use insurance scores for underwriting decisions, and to partially determine charges for premiums. Insurance scores are applied in personal product lines, namely homeowners and private passenger automobile insurance, and typically not elsewhere.

Medibank Private Limited is a national private health insurer based in Australia. It is Australia's second largest health insurance provider behind Bupa with 3.8 million members, 29.1% of the market, under two brands. Previously an Australian government business enterprise, it was privatised in 2014 by the Abbott Government and now operates as a publicly listed company on the ASX.

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Insurance law is the practice of law surrounding insurance, including insurance policies and claims. It can be broadly broken into three categories - regulation of the business of insurance; regulation of the content of insurance policies, especially with regard to consumer policies; and regulation of claim handling.

QBE Insurance Group Limited is Australia's largest global insurer. It provides insurance services mainly to Australia, America, Europe and Asia Pacific region. QBE has 14,226 employees in 37 countries worldwide. As of August 2012, QBE was ranked among the world's top general insurers. QBE had market capitalisation of A$17.81 billion.

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References

  1. ↑ ustreas.gov
  2. ↑ ofcfaq.org
  3. ↑ washingtonpost.com
  4. ↑ ofcfaq.org
  5. ↑ schumer.senate.gov
  6. ↑ fsround.org
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