Much ink has been spilled in recent years over the increasing compliance burdens resulting from federal legislation such as HIPAA and Sarbanes-Oxley. But insurers are far from content with the costs of traditional state regulation. That discontent has fueled advocacy for the adoption of an Optional Federal Charter (OFC), which would permit life and other nonhealth insurers to choose to be chartered and regulated federally or elect to remain within the state regulatory structure. Organizations advocating OFC - including the American Council of Life Insurers (ACLI), American Insurance Association (AIA) and American Bankers Insurance Association (ABIA) - have circulated a Draft National Insurance Act that calls for the establishment of an Office of National Insurance and the appointment of a Commissioner to head that office within the U.S. Department of the Treasury.
According to a recent study jointly undertaken by the ACLI and insurance industry vendor CSC (Austin, Texas), regulatory compliance under the present state-by-state system will cost the life insurance industry $11 billion over the next decade. Information technology is the largest single cost area within that figure, accounting for 22 percent of the total. The study's figures are projected for the entire industry from survey responses from more than 100 companies that, combined, account for $160.2 billion in premiums and more than $1.5 trillion in assets within the U.S. life insurance market.
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