GLB mandated creation of a National Association of Registered Agents and Brokers to oversee the producer side of the industry if 29 states had not enacted rules creating state reciprocity for producer licensing within three years.

The U.S. House Financial Services Committee is drafting the State Modernization and Regulatory Transparency (SMART) Act that would create federal standards for state regulation.

While making clear that “this is not something I am advocating,” Mr. Csiszar said a likely scenario is that when SMART moves to the U.S. Senate, support could grow for mandating an optional federal charter within three years if a specified number of states do not comply with the federal standards provision.

“It would be the only leverage Congress would have over the states to comply,” added Mr. Csiszar, who resigned last year as South Carolina's regulator and president of the National Association of Insurance Commissioners to become president of the Property Casualty Insurers Association of America.

“Having been part and parcel for six years in the regulators' world, I am having difficulty grasping how our state-based system of its own volition is going to respond to change,” Mr. Csiszar said.

“I say that for a number of reasons,” he added, one of which is that each state has a different basis for regulating insurance–including the fact that in some states regulators are appointed, while they are elected in others. “If you are an elected commissioner, you have a different perspective than an appointed commissioner,” he noted.

As a result, he said, commissioners have “a variety of agendas, which makes it difficult in coming to a consensus.” He said this is true even if the state's legislature and governor are from the same political party.

He added that it is difficult to clear political hurdles to get model laws through state legislatures, while insurance departments have bureaucracies that are entrenched. Plus insurance departments in large states react to proposals differently than do departments in smaller states, he added, making it difficult to bring about regulatory changes.

Even limiting differences to population and geography, it is unrealistic to expect the states to change across the country in a timely and uniform manner, he said. “Bringing about such change is difficult and well nigh impossible,” he added.

Moreover, he said, even with GLB's NARAB provision, and armed with a model act to base their laws on, “there is still nothing uniform about producer licensing laws based on NARAB,” he said. “Its intent was to create uniformity, but the outcome was far from uniform. Each legislature in each state threw in its own things.”

Quotebox, with mug:

“Having been part and parcel for six years in the regulators' world, I am having difficulty grasping how our state-based system of its own volition is going to respond to change.”

Ernst Csiszar, PCI President