America’s economic preeminence in the world hinges upon its global leadership in the financial services industry. Earlier this year, New York City Mayor Michael Bloomberg and U.S. Sen. Charles Schumer (D-N.Y.) commissioned a report on what changes were needed to keep the United States competitive in the global marketplace. One of the report’s top recommendations was the creation of an optional federal charter for insurance.

We have introduced the National Insurance Act (NIA) to address issues of competition and consumer choice. The act would create an optional federal charter (OFC) for life and property/casualty insurance providers. Designed to emulate the regulatory structure found in the dual banking system, the NIA would give insurance providers the choice of being regulated at the state level or by the new federal regulator.

The bill gives consumers what they want: choice and protection. Insurance customers will have more pricing and product options, driven by a competitive marketplace freed from state price controls and regulatory hurdles. Consumer protection would be strengthened through the creation of a Division of Consumer Protection that would protect against unfair and deceptive practices by insurance providers and agents for the advertising, sale and administration of insurance products.

The current state-based regulatory system has hurt the U.S. insurance industry’s ability to compete globally. In 2006 alone, the U.S. insurance services’ trade deficit totaled $24 billion, suggesting that domestic insurance providers are operating at a significant competitive disadvantage. The current system — which requires insurers to work with 51 different state regulators — is burdensome and slows new products’ “time to market,” sometimes by years. These obstacles currently discourage insurance innovation and product development to capitalize on emerging growth markets. A national charter will foster greater industry innovation and agility.

Also, by creating an Office of National Insurance, the act would give the insurance industry a collective voice in policy decisions that effect the industry’s position in the global marketplace. Whether responding to a national crisis, formulating tax policy or negotiating a major free trade agreement, the Federal Reserve, the Office of the Comptroller of the Currency, and the SEC all have a seat at the table when policy is developed. The nation’s insurers need a seat too.

The insurance industry has changed and evolved dramatically since 1871 when the National Association of Insurance Commissioners (NAIC) was established. But for 136 years, the regulatory system has not significantly changed. It’s time to allow the insurance industry to move into the 21st century so that it can more effectively compete on the global stage and provide more pricing and product alternatives to our nation’s consumers.

Royce and Bean are members of the House Financial Services Committee.