The revised bill would provide preemption authority for the home-state regulator where an insurer is domiciled.

Regulators would administer the act under Congressionally set national standards in terms of licensing, examination and product approval. It would also eliminate the so-called “partnership” system in current versions that would have created a federal office to coordinate insurance regulation with state officials.

Congress would establish certain “prescriptive standards” that state regulators would have to meet by a certain date, according to one lawyer who has seen the draft bill. State regulators would have to execute these standards or face certain sanctions, the lawyer noted.

According to the attorney, the problem for the industry is that if a state regulator doesn't comply with the standards, a carrier, agent or broker would have to sue the regulator in federal court to force compliance.

He said, “The problem the industry sees with the bill is that companies–whether they be carriers, agents or brokers–see little future in suing your state regulator in, of all places, federal court.”

The revised bill is being prepared for presentation to Reps. Mike Oxley, R-Ohio, chair of the committee, and Richard Baker, R-La., who heads the panel's Capital Markets Subcommittee.

A panel official confirmed “there has been some redrafting,” but cautioned that no final decision has been made as to whether a revised bill will see any action this year. However, one industry lobbyist familiar with the deliberations said the intent is indeed to introduce it this year.

In a nutshell, the proposal would give the home-state regulator preemptive national licensing authority over agents, the regulator of the domicile state for a carrier the same authority, and the regulator of the state of the policyholder preemptive authority in the case of surplus lines–all under standards set by Congress.

Under the current version, a carrier would have to be examined every three years, with the home-state regulator serving as lead examiner. However, the home-state regulator would be required to allow regulators in other states where the carrier does business to participate.

Players here emphasized that this latest SMART initiative is very much a work in progress. Several lobbyists familiar with the redraft said they believe the current draft of the streamlined bill is likely to undergo extensive changes before being introduced.

Charles E. Symington Jr., senior vice president for government affairs and federal relations for the Independent Insurance Agents and Brokers of America, said “the IIABA is a strong supporter of the SMART concept, which Chairmen Oxley and Baker have been working on for the past year. We will continue to support the chairmen if they decide to move forward with the bill this year.”

Dennis Kelly, a representative for the American Insurance Association, said: “We understand some changes from the original SMART Act draft are being made, and we'll take a close look at them. We appreciate Chairmen Oxley and Baker focusing on fixing the current insurance regulatory system, which more and more members are acknowledging is broken.”

A harder line was taken by a recently formed group called Agents for Change, which consists primarily of life insurance agents–who, in general, are moving slowly but surely to align themselves with the Senate's optional federal charter approach.

“Moving to jump-start the SMART bill and streamline it proves what we have known from the beginning–this policy proposal is fatally flawed,” said Peter Ludgin, newly appointed executive director for Agents for Change.

“Insurance agents and brokers want the option of being regulated by the states or the federal government,” he said. “It is as simple as that. This is about efficiency, speed to market, servicing customers across state lines, licensing hassles, competition in the marketplace, and ultimately what is best for the consumer.”

He predicted that “once our friends in the House understand that insurance producers are tired of jumping through hoops to service their constituents, we are confident they will see the light and support an optional federal charter. In the 21st century, there is simply no excuse to not offer an option.”

The American Council of Life Insurers was not immediately available for comment, but a lobbyist for a life insurance carrier who declined to be named–but whose company formerly supported SMART since its inception several years ago–said “it is going to be much more difficult to get us to support this bill today, even though it is being advertised as a more streamlined approach.”

“We're questioning whether it is in our best interest to have Rep. Baker introduce this bill in the hope that we can convince him to support the OFC next year, when Rep. Oxley is no longer in the picture,” the lobbyist added, referring to the fact that Rep. Oxley is leaving Congress at year's end.

This lobbyist added that supporting SMART in the past as a means of keeping regulatory reform going was successful.