ALLOW FEDERAL CHARTER AMERICAN INSURANCE ASSOCIATION URGES

The US Treasury Department has been urged by the American Insurance Association to permit insurers to choose a federal charter in preference to a state charter. In a letter to Treasury Secretary Henry Paulson this week, the Association said that the move would be a constructive part of the department’s avowed intention to modernise financial regulation in order to enhance the competitiveness of the US capital markets. AIA president Marc Racicot wrote that “we believe your effort to evaluate the current regulatory regimes in the financial services sector is particularly important for the insurance industry, because insurers are governed by an outdated, inefficient regulatory structure”. He felt that the US insurance industry “should function with oversight by a world-class regulator in a modernised, uniform framework”. That framework, Mr Racicot felt, could be modelled on the dual banking system in the US, giving insurers the option to be nationally regulated. He noted that such a move would also “preserve the state-based regulatory structure for those choosing to remain in the current system.”