Compact Initiative Moves With The Speed Of A Silver Bullet
We are amazed at how quickly the idea of an interstate compact has taken hold at the National Association of Insurance Commissioners.
In a world where model laws and regulations can entail years of meetings by task forces, subcommittees, committees and executive sessions, the compact initiative has moved with the speed of a silver bullet.
One could easily be forgiven for thinking that the NAIC views this as state regulations last, best shot to stave off federal oversight and stay in business as the regulatory mechanism for the business of insurance.
Theres no doubt in anyones mind–least of all insurance regulators–that something has to be done to streamline the system and speed up product filings, especially in the life insurance and annuity businesses.
One solution to this is the federal charter option that has been pushed by the American Council of Life Insurers.
Needless to say, this option was never an option for the NAIC. Thus, the compact drive was started at top speed only a few months ago.
Compacts have not been a notoriously successful solution to past regulatory problems, so there is some cause for skepticism about the current effort. But then, there has not been in the past a menace to the system equivalent to what the feds represent.
Compacts tend to be messy and get embroiled in all sorts of political issues, such as the representation of small states versus big states.
Even more problematic has been the perennial reluctance of state legislatures to give up even a modicum of control of insurance regulation within their domains. Yet now, an organization like the National Conference of Insurance Legislators, is generally supportive of the compact.
“Our people understand the seriousness of the federal threat,” said Robert Mackin, NCOILs executive director.
The timetable the NAIC has established is ambitious. It means to adopt the compact during its fall meeting in September and to present it in state legislatures starting next January.
With state regulators and state legislators working in tandem on the initiative, the compact may have its best shot ever at becoming a reality, despite the wrinkles that still remain to be ironed out.
Reproduced from National Underwriter Life & Health/Financial Services Edition, June 17, 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.