NU Online News Service, June 22, 2:15 p.m. — Washington
House Financial Services Committee Chairman Mike Oxley, R-Ohio, warned that, if insurance regulation is not reformed, Congress will step in.
“Make no mistake about it,” he said at a hearing, “true reform is necessary. It is my hope that our state legislators and insurance commissioners can enact such reform. If not, Congress will return to this issue with our own solution.”
Representatives from both the National Association of Insurance Commissioners, Kansas City, Mo., and the National Conference of Insurance Legislators, Albany, N.Y., responded that they can and will get the job done.
“State insurance regulators recognize that traditional methods of insurance regulation need to be modernized to allow the insurance industry to keep pace with its competitors and to ensure that regulators are able to serve the best interests of insurance consumers,” said Michigan Insurance Commissioner Frank Fitzgerald.
“I am excited to report that we remain strongly committed to the product speed-to-market modernization initiative with unprecedented consensus,” he said.
Ohio Insurance Commissioner Lee Covington said the NAIC has a two-track approach under way aimed at improving speed-to-market.
Under the Coordinated Advertising Rate and Form Review Authority, he said, there will be a single point of filing based on an agreed upon set of national product standards.
CARFRA is currently being tested in 10 states and focuses on life and health products. But it will soon be expanded to cover more products and states, Covington said.
Meanwhile, he said, NAIC is also working to improve insurance department operations through a “best practices” approach and establish a more efficient regulatory framework for commercial products.
“States are committed to making both of these processes work well to benefit insurance consumers and insurers,” he said.
Speaking on behalf of NCOIL, Illinois State Rep. Terry Parke said that state legislators will work to implement reform.
“NCOIL believes that state regulation has served the needs of families and businesses that buy insurance and has fostered a strong market of financially sound competitive insurers,” he said.
“Now, NCOIL recognizes the need to respond to new challenges and modernize state-based insurance regulation,” Parke said. “NCOIL is more than willing to work with all interested parties to make that happen.”
But J. Robert Hunter, insurance director for the Consumer Federation of America, Washington, and former Texas insurance commissioner, questioned whether NAIC is headed in the right direction.
“We can tell you with certainty that consumers, who have been victims of vanishing premiums, churning, race-based pricing, creaming and consumer credit insurance policies that pay pennies in claims per dollar in premium, are not clamoring for such policies to be brought to market with even less regulatory oversight than in the past,” he said.
From an efficiency and consumer protections standpoint, Hunter said in testimony submitted to the Committee, it makes no sense to lessen efforts to prevent the introduction of unfair and inappropriate policies in the marketplace.
Indeed, he said, it takes less effort to prevent a bad policy from coming onto the market, than to stop a company from selling it and then providing restitution to policyholders after-the-fact.