Question

Which of the following statements concerning the proposed optional federal charter for life insurers is (are) true?

1) I. Large insurers operating in many states would more likely prefer a state charter while smaller, regional, insurers would more likely choose a federal charter.
2) II. Proponents of the federal charter argue that it would speed the development and approval of new products.

Answer 1

Statement II is true as a federal charter could speed up product development for life insurers. Large insurers favor federal charters to simplify multi-state operations, while smaller insurers might prefer state charters for localized control.

Step-by-step explanation:

The proposed optional federal charter for life insurers is a debated concept with various arguments for and against it. Statement II is true; proponents of the federal charter argue that it would speed the development and approval of new products, streamlining regulatory processes and fostering innovation within the insurance industry. Regarding statement I, it is generally expected that large insurers benefit from a federal charter due to economies of scale and the need to navigate fewer regulatory frameworks when operating in multiple states. Conversely, smaller, regional insurers may prefer state charters due to less complexity and potentially more localized control.