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The American Council of Life Insurers has drafted enabling legislation for speed-to-market product filings.

The ACLI released the draft to insurance regulators at a commissioners’ annual weekend meeting earlier this month and will discuss it during the spring meeting of the National Conference of Insurance Legislators in Charleston, S.C., this week.

The draft, in its current form, enables a commissioner to use a national system of product regulation to fulfill regulatory responsibilities.

Any product filed with the national system, according to the draft, would meet filing requirements and would not be subject to any “inconsistent or additional” provision of law or regulatory requirement.

A commissioner would reserve the right to remove a product from the national system if protections available under a state’s regulatory system were not provided.

Also, under the legislation, a commissioner would retain authority to enforce penalties against insurers violating insurance law.

The approach is quicker than a line-by-line alteration of each state’s insurance code, says Patricia Parachini, ACLI senior legislative director.

Companies are interested in seeing a more uniform approach to product filing, she says. In fact, additional product filings are being made ready for the current national pilot, the Coordinated Advertising Rate and Form Review Authority.

Commissioners’ authority “is not diminished in any way, shape or form,” says William Fisher, vice president and associate general counsel with MassMutual Life Insurance Company, Springfield, Mass. Rather, he continues, it gives commissioners the authority to participate in CARFRA.

The system is self-supporting and would not direct state filing fees away from state governments, he adds.

Michigan Commissioner Frank Fitzgerald says the approach is one of several, including an interstate compact. He says it is a “great change” to delegate authority beyond state boundaries to a CARFRA body.

Fitzgerald says that 12 years in the Michigan House of Representatives taught him that before legislators relinquish authority, they will want to know why they should enact such legislation.

Insurers need to be ready to make a case as to why this relief is needed and why they would be at a competitive disadvantage without it, Fitzgerald adds. Insurers may also be asked why they haven’t made more use of the CARFRA pilot, he says.

Currently, only one insurer has made a product filing through CARFRA. Last September, Prudential Financial in Newark, N.J. made a term life product filing through the pilot.

Companies may also need to explain why they need the legislation put in place so quickly, Fitzgerald continues.

NCOIL is awaiting the ACLI proposal and may not take an official position until its summer meeting in Boston, says Robert Mackin, executive director with the organization, based in Albany, N.Y. But he reiterated NCOIL’s position that any national system such as CARFRA “must have teeth.” It must be nonvoluntary, effective and national in scope, he adds.


Reproduced from National Underwriter Life & Health/Financial Services Edition, February 25, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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