Optional federal charter for US life insurers

The Administration of President Barack Obama is in the process of finalising proposals for reforming the United States’ financial regulatory structure. The aim of the reform is to avoid a similar financial crisis to the recent one. The American Council of Life Insurers (ACLI) is strongly in favour of the inclusion of an optional federal charter for insurers to assure that the resulting regulatory structure operates effectively with respect to all segments of the US financial services industry. The US insurance sector is currently regulated at the individual state level. Here, in a letter sent to US Treasury Secretary Timothy Geithner earlier this month, Frank Keating, president and chief executive of the ACLI, outlines the ACLI’s argument for the inclusion of an optional federal charter for insurance in the Obama administration’s plan for financial services regulatory reform

Without question, the life insurance business is systemically important both to consumers and to the economy. Life insurers are the single largest source of corporate bond financing, hold over 22% of all private employer-provided retirement assets, have over $20 trillion of life insurance coverage in force, hold approximately $2.6 trillion in annuity reserves, and hold some $5 trillion in total assets. Moreover, recent events have demonstrated that our business is not immune from the types of problems that have affected other segments of the financial services industry. In short, Congress can ill-afford to ignore life insurers as it revamps the regulatory landscape.