Congressmen Have Doubts On Ability Of NAIC To Achieve Reform
Despite its best efforts, the National Association of Insurance Commissioners may not be able to achieve the regulatory reforms the insurance industry needs, said the chairman of the House Financial Services Committee.
“I am not here to blame the NAIC for a lack of reforms,” Rep. Mike Oxley, R-Ohio, said during a hearing on regulatory reform. “To a large degree, their hands are tied.”
While the NAIC can approve initiative after initiative, Oxley said, state legislatures must act on them. “Unfortunately, it is becoming increasingly apparent that the NAIC may be facing an insurmountable task,” he said.
While he hopes that the NAIC and state legislators will be able to achieve reform, Oxley said 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 Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, 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.”
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.
At the hearing, Baker asked Iowa Insurance Commissioner Terri Vaughan, who is NAIC president, how quickly an interstate compact that embodies regulatory reform could be achieved.
Vaughan said she could not give a specific time frame. She said 46 states were able achieve agent and broker licensing reciprocity within two and a half years of Congress calling for reform as part of the Gramm-Leach-Bliley Act.
Vaughan cautioned, however, that she is not saying an interstate compact could be achieved in the same time frame. The key, she said, is the participation of state legislatures. NAIC, she said, is working closely with state legislative groups on the effort, which she believes 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 the Iowa insurance department focuses a lot of attention on the needs of senior citizens. Vaughan said she questions whether a federal regulator would be as sensitive to those needs.
Reproduced from National Underwriter Life & Health/Financial Services Edition, June 24, 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.