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National Insurance Charter Insurance is one of three primary pillars of the financial services industry. However, unlike banks and securities, insurance is regulated at the state, not the federal, level. The primacy of state regulation dates to 1868 when the Supreme Court ruled in Paul v. Virginia that insurance did not constitute interstate commerce, and thus did not fall under the powers granted the federal government in the Constitution. Complaints that the state-based insurance regulatory system hinders insurance producers, and the consumers they serve, have been rising. Members of Congress have responded by introducing legislation to create a national insurance charter for producers and insurers. Under a national insurance charter both the states and the federal government would offer a chartering system. Producers would be able to choose whether to apply for a federal insurance charter, which would exempt them from state insurance regulations, or to continue under the current patchwork of state-based insurance regulation. Proponents of a national insurance charter cite the efficiencies that could be gained from a uniform federal system: licensure reform, speed to market of products, and fair market pricing for property & casualty products. A national insurance charter would create an Office of National Insurance (ONI) that would be housed at the United States Department of the Treasury. A National Insurance Commissioner would have the authority to issue federal licenses to insurance producers. A federal licensee would be authorized to sell, solicit, or negotiate insurance in 56 jurisdictions (50 states, District of Columbia, and the five U.S. territories). States would be preempted from interfering with the actions of federally licensed insurance producers, including when those producers are acting on behalf of a state insurer. Bipartisan Legislation to Create Producer Liscensure Choice Reintroduced in the United States House of Representatives in the 111th Congress
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