NU Online News Service, July 17, 7:35 p.m. – Members of the National Conference of State Legislators will discuss an updated version of the proposed interstate life insurance product filing compact next week in Denver, at the NCSL’s annual conference.
The compact would create a single, multistate system that insurers could use to file for regulatory approval of life insurance products.
State lawmakers and state insurance regulators are developing the compact to ward off expansion of federal regulation of the insurance industry. Some large companies and industry groups want to create a “federal chartering” system that would give insurers a choice between state regulation and federal regulation.
The National Association of Insurance Commissioners, Kansas City, Mo., is supposed to release a new compact draft Friday that will incorporate work by members of the NAIC, the NCSL and the National Conference of Insurance Legislators, Albany, N.Y.
NCSL officials are expecting the NCSL to discuss the Friday draft.
Draft discussion participants say one controversy concerns the membership of the management committee that would oversee the compact.
Big states are arguing that they should have more representation because they collect more of the insurance premium revenue. Smaller states argue that they also need to have influence over the compact.
A “big state” plan and a plan proposed by Ohio Insurance Director Lee Covington seem to be getting the most attention from legislators.
The big-state plan would provide for representation by the six states that generates the most premium revenue. The management committee would also include four representatives from regional zones and two elected at-large members.
The other proposal would create a 14-member management committee. California, Florida, Illinois, New York, Pennsylvania and Texas, which each account for at least 4.5% of U.S. premium revenue, would all have representatives on the committee. The committee would also include representatives from four states that each account for between 2% and 4.5% of the market, and four representatives from states that each account for less than 2% of the market.
The six largest states represent 40% of premium volume; midsize states, 31%; and small states, 29%.
States that generate most of the premium tax revenue will want a vote, and “I think that they should have it,” says NCOIL President William Larkin, who serves in the New York Senate.