The financial services industry demonstrated its overwhelming support for insurance regulation reform earlier this week when 135 national and regional insurance companies and agencies, banks and trade associations asked the U.S. Senate in a letter to enact optional federal insurance charter legislation.

"Consumers, and the insurers and insurance agents that serve them, need a modern insurance regulatory system that provides greater product choice and portability," the Optional Federal Charter Coalition (OFCC) said in its letter.

The letter also noted that establishing an optional federal charter would not supplant state regulation or state premium taxation. The new system would allow insurers and agents to choose between state and federal regulation, similar to the dual-banking system that has been in place for more than 140 years.

"The burden of having to comply with rules from 56 separate insurance regulators is too inefficient for companies, agents and consumers to manage, especially those whose interests are national in scope," the letter continued. "Individual state regulators cannot speak to our national or global interests with the same scope and effectiveness as a strong, federal entity, such as the U.S. Department of Treasury or the Federal Reserve."

The need for modernization, the OFCC letter noted, is a necessity to successfully compete in today's market. To operate or deliver a product to market, insurers face obstacles such as inconsistent regulations, barriers to innovation and conflicting agent and education requirements.

"We have been working with the states to develop model laws and uniform product standards but after literally decades of effort and despite good intentions, state regulators have been unable to provide an efficient, uniform regulatory structure," the coalition said.

"An optional federal charter preserves states' rights, while allowing insurance regulation to move into the 21st Century."

OFCC represents the largest and most diverse group to push for a modernized insurance regulatory system. Corporate supporters serve millions of consumers and represent every branch of the insurance and banking industry. Trade group members include Agents for Change, American Bankers Association, American Bankers Insurance Association, American Council of Life Insurers, American Insurance Association, The Council of Insurance Agents and Brokers, The Financial Services Forum and The Financial Services Roundtable.