The National Association of Insurance Commissioners publicly rolled out an interstate compact draft for product filing that it says will remove the need for insurers to seek an optional federal charter.
Some insurers are exploring an optional federal charter option because of the expense and competitive disadvantage of filing in individual states compared with requirements for banks and mutual funds, says Terri Vaughan, Iowa commissioner and NAIC president. If the compact addresses these issues, then it will take a reason for pursuing a federal charter off the table, she adds.
Vaughan says that she does not believe that Congressional approval will be needed to advance the compact since the McCarran Ferguson Act delegates insurance authority to states.
At press time, feedback from insurers was scheduled for May 23 and again during the summer NAIC meeting next month.
“Interstate compacts are not particularly well understood in insurance circles,” according to Vaughan. The NAIC has used the compact structure for its Interstate Receivership compact, a compact with three participating states.
But legislatures are seeing compacts used with greater frequency, she adds. For instance, she cites a sales tax compact that has 30 participating states. “The timing is absolutely right,” she says. However, Vaughan also notes that it takes a couple of years to bring states on board to a compact.
The issue will also be discussed in June during a meeting of the National Conference of State Legislatures, Denver.
NAIC has sought the input of both the National Conference of Insurance Legislators, Albany, N.Y. and the NCSL.
Two weeks ago, representatives from the three organizations met.
The meeting included Vaughan; State Senator William Larkin, R-N.Y., NCOIL president; and State Senator Stephen Saland, R-N.Y., NCSL president. Others present included New York Superintendent Greg Serio; NAIC Vice President and Arkansas Commissioner Mike Pickens; NAIC Secretary Treasurer and Illinois Director Nat Shapo; and North Dakota Commissioner Jim Poolman.
Sen. Larkin is confident about the compact’s prospects. “I think we can do it.” The benefits include advancing speed-to-market and producer licensing needs, Larkin notes. “The idea of a compact has been tried before and is a benefit to consumers,” he adds.