Bankers Want Federal Insurance Chief.

Banks seek uniform regulation; new budget expands Medicare coverage of telemedicine; insurers embrace financial-services committee chairman.

The ABA Insurance Association, a unit of the American Bankers Association, said it would push draft legislation to create an optional federal charter for regulating national insurance companies.

Insurance lobbyists are preparing for a congressional debate on this issue, with one insurance association even preparing its own version of an optional federal charter for life insurers.

The ABAIA draft, more than two years in the making, would establish a structure similar to the federal system for regulating banks. The draft would give insurance companies the option of being chartered and regulated by the federal government or by an individual state. Banks have operated under a dual regulatory system for almost 140 years.

The proposal calls for establishing an Office of the National Insurance Commissioner within the Treasury Department. This office is patterned after two other Treasury bureaus, the Office of the Comptroller of the Currency, which charters and regulates national banks, and the Office of Thrift Supervision, which charters and regulates federal savings and loans. Like those offices, the Office of the National Insurance Commissioner would be headed by a single person, appointed by the president and confirmed by the Senate for a five-year term.

Banking lobbyists are anxious to get the debate going in Congress, said Beth Climo, executive director of the ABAIA. "Our members are familiar with the federal and state charter system for banking, and it works well. We think this prototype and experience would transfer very well to the insurance industry," Climo said.

The ABAIA, a separately incorporated subsidiary of the American Bankers Association, represents nearly a dozen banks--including Bank of America Corp., Chase Manhattan Corp., Citigroup, Fleet Boston Corp., Wells Fargo--that sell or operate in the insurance industry.

ABAIA's proposal covers life, health and property/casualty insurance, as well as agents and underwriters, she said.

Under the ABAIA proposal, the national insurance commissioner would charter, regulate and supervise national insurance companies, which could underwrite and sell insurance and annuities, as well as national insurance agencies, which could broker or sell insurance and annuities.

Working with the current state-based insurance regulation system is a problem for ABAIA's members that operate nationally and internationally, Climo said. "You're dealing with a patchwork of 50 different laws and rules, and 50 different interpretations. We're looking for a uniform way to get products to market more promptly," she said.

The American Council of Life Insurers is preparing its own draft of a dual charter for life insurance companies, said Bruce Ferguson, the ACLI's deputy vice president for state relations. "Many believe there will be a debate over optional federal chartering whether we like it or not, and we need to be ready," Ferguson said.

Medicare Increases Telemedicine Reimbursements

Increased Medicare reimbursement for telemedicine services was included in federal budget legislation recently signed by President Clinton.

The language is included in the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000, which also raised minimum reimbursement to health plans participating in the Medicare+Choice program. SCHIP stands for the State Children's Health Insurance Plan.

The act also expands the Medicare telemedicine coverage area, said Jonathan Linkous, executive director, American Telemedicine Association. The Washington, D.C.-based association advocates and promotes greater access to medical care for consumers and health professionals via telecommunications technology.

"This legislation means that now real dollars will be flowing out of the federal government for telemedicine," Linkous said. "This also says now telemedicine is accepted as part of the practice of medical care."

Medicare's telemedicine program was a very small one set up a couple of years ago to provide limited coverage in rural and the most remote frontier areas of the United States--locations with a shortage of health professionals. But the regulations placed such heavy restrictions on the program that it wasn't used much, Linkous said.

Under the new legislation, which takes effect Oct. 1, many of the restrictions have been lifted.

Insurers Approve of Oxley as New Committee Head

The choice of U.S. Rep. Michael Oxley (R-Ohio) to head the newly created Financial Services Committee has been well-received by the insurance industry.

Oxley brings experience in the financial-services legislative arena to his leadership position, having led the Financial Services Subcommittee of the Commerce Committee the past six years, said Robert A. Rusbuldt, executive vice president of the Independent Insurance Agents of America.

The new House of Representatives recently created a Financial Services Committee to take jurisdiction over the bulk of insurance matters from the Commerce Committee. The Financial Services Committee also has jurisdiction over banks and banking, securities and exchange, and other areas.

Dennis Kelly is Washington bureau manager.