The pressure to maintain state authority is acting as a unifying force as legislators prepare to meet in Denver this week to continue work on an interstate compact that would create a single source of filing for life insurance products.
The specter of a federal charter is unifying state insurance regulators and state legislators in purpose. Rather than arguing philosophy, their efforts are aimed at smoothing out details.
As the National Conference of State Legislatures holds its annual conference in its home city of Denver, it is expected that an updated version of the compact will be discussed, although any action may be deferred until October.
The compact draft up for discussion is expected to be the latest version by the National Association of Insurance Commissioners, Kansas City, Mo., that was due to be released by July 19.
That document is the product of discussions between the NAIC, NCSL and National Conference of Insurance Legislators.
A major issue is who should be represented on a management committee to oversee the compact.
Big states are arguing that because they collect the lions share of total industry premium, that they should have a larger representation. Smaller states counter that they need to have a big enough say over decisions in the running of the compact.
Two of four proposals are currently receiving the most interest from legislators: a “big state” option and a plan proposed by Ohio Insurance Director Lee Covington.
The “big state option” would include the six largest states, using premium volume as a measure. There would also be four zone representatives and two at-large members under this plan.
The other plan proposes a 14-member committee that would include California, Florida, Illinois, New York, Pennsylvania and Texas, all states with premium with at least 4.5% of the market. Four medium-sized states with premium of between 2%-4.5% of the market would be represented as well as four smaller states with premium under 2% of the market.
The six largest states represent 40% of premium volume; middle-sized states, 31%; and, small states, 29%.
States that comprise most of the premium will want a vote, says New York State Senator William Larkin, Rep.-Con., New Windsor, N.Y., and NCOIL president, who adds, “I think that they should have it.”