One of the largest global insurance organisations has sent a letter to the US Department of Treasury calling for more uniform federal regulation as opposed to the current state-based system as well as a more level playing field for international subsidiaries.Calling the current state-based system “inefficient, redundant and increases costs to consumers,” the Risk and Insurance Management Society, Inc (RIMS), offered their position to the Federal Insurance Office (FIO), which has asked for comments from insurance entities about their views on the improvement and modernisation of the US insurance industry. RIMS represents more than 3,500 risk management groups worldwide.The solicitation for comment is part an effort by FIO to seek input from interested parties for a report due to Congress early next year.“Currently there is very little uniformity of regulation of insurance as is evidenced by the state-by-state patchwork of laws related to new product approval, self-insurer requirements, collateral requirements, solvency requirements, state licensing requirements and reinsurance requirements,” said Scott Clark, RIMS president and director. “There is an inherent weakness in the state-based system where states have the ability to legislate variances to national standards or model laws or simply apply or interpret these standards in a manner that diverges from any national standard.”According to Mr Clark, under the current system, insurers must file redundant approval requirements for each state within they do business that creates “significant barriers to entry into new markets and make it difficult to launch new and innovative products, all to the detriment of consumers”.Currently each US state has different laws and regulations governing insurance companies that operate there. Opponents of this system say that the burden and cost of complying with each of these regulations, which are often redundant and sometimes conflicting, adds unnecessary complexity and costs to insurance products, which are ultimately passed on to consumers.In his letter, Mr Clark also suggested the need for regulators “to set policy with the objective of setting a level playing field that treats insurers that are part of international groups fairly in relation to purely U.S. domestic insurance groups”.“The authority provided to the FIO in Dodd-Frank appears to address this scenario by giving the FIO Director the authority to preempt state laws which treat non-U.S. insurers domiciled in foreign jurisdictions less favorably.He also added that the FIO should work with local US regulators so they have a “clear understanding of the global implications of their actions”.The letter outlined the organisation’s thoughts on the formation of an optional federal charter as it relates to commercial property and casualty lines of (re)insurance.“RIMS argues that greater federal regulation such as that envisioned by an optional federal charter would increase uniformity for those companies which choose a national charter and would reduce redundancy for those aspects of regulation that the federal charter would preempt,” wrote Mr Clark. “Currently, the banking system is bifurcated and has not suffered in any way related to its dual regulatory structure. More than likely, some insurance products lend themselves to federal regulation while others, such as workers’ compensation, are more suitable to remain under state regulation.”The full letter is posted on www.rims.org.