Optional Federal Charter for Insurers Frequently Asked Questions Version 2.0
June 23, 2008 – 6:20 pmOne of the greatest challenges facing America’s insurers is the balkanized nature of regulation for what should be a nationwide industry. The National Insurance Act (H.R. 3200 and S. 40) seeks to address this problem by creating a new federal insurance regulator, setting up a system known as an Optional Federal Charter (OFC), which would let insurers choose to organize under either federal or state law. (The Treasury Department’s Blueprint for a Modernized Financial Regulatory Structure endorses creating an OFC.) Currently, insurers operating in a given state must operate only under that state’s insurance laws. A federally chartered insurance company would have to obey all general state business regulations, but would work under a new federal regulator, which would enforce the same insurance-specific laws throughout the country. Federally chartered insurance companies would sell homeowners’, life, and auto insurance, but not health insurance. An OFC may not be an ...