NU Online News Service, June 19, 1:14 p.m. — Washington
The chairman of the House Financial Services Committee says the National Association of Insurance Commissioners may not be able to achieve the regulatory reforms the insurance industry needs, despite its best efforts.
“I am not here to blame the NAIC for a lack of reforms,” Rep. Mike Oxley, R-Ohio, said during a recent hearing on regulatory reform held by the committee’s Subcommittee On Capital Markets, Insurance and Government Sponsored Enterprises. “To a large degree, their hands are tied.”
Although the Kansas City, Mo.-based NAIC can approve initiative after initiative, state legislatures must act on them, Oxley said.
“Unfortunately,” he said, “it is becoming increasingly apparent that the NAIC may be facing an insurmountable task.”
Oxley said he hopes that the NAIC and state legislators will be able to achieve reform, but he pledged that his committee will not sit idly by.
“We will keep building on our reform efforts and we will not let up until consumers receive the most effective and competitive marketplace that can be created,” he said.
Rep. Paul Kanjorski, D-Pa., the ranking Democrat on the Capital Markets subcommittee, agreed.
“No matter what side one takes in this long-standing debate, it has become clear to me that this is no longer a question of whether we should reform insurance regulation in the United States,” he said. “Instead, it has become a question of how we should reform insurance regulation.”
Subcommittee Chairman Richard H. Baker, R-La., said that while it is not possible to resolve the issue in the short term, he will continue to pursue the efforts.
“This will not be the last hearing,” he said.
Indeed, Baker said, he expects to convene a roundtable discussion among subcommittee members over the next few months to identify areas of agreement and disagreement.
During the hearing, Baker asked Iowa Insurance Commissioner Terri Vaughan, who is president of the NAIC, how quickly an interstate compact that embodies regulatory reform could be achieved.
Vaughan said she could not give a specific time frame. She said that 46 states were able to achieve agent and broker licensing reciprocity within two-and-one-half years of Congress calling for reform as part of the Gramm-Leach-Bliley Financial Services Modernization Act of 1999.
But Vaughan warned that she was not saying that an interstate compact could emerge as quickly. The key, she said, is the participation of state legislatures.
Vaughan added that the NAIC is working closely with state legislative groups on the effort, and that she believes the compact can be put into place.
Asked by Kanjorski what would be the worst disadvantage of federal regulation, Vaughan said it would be the inability of regulators in her state of Iowa, for example, to address local market issues.
She noted that Iowa has a relatively large population of senior citizens, and that the Iowa Insurance Department focuses much of its attention on the needs of senior citizens.
Vaughan said she questions whether a federal regulator would be as sensitive to those needs.