NAIC Compact Hits Speed Bumps On Fast Track
An interstate compact proposal that is drawing mixed support as a way to provide a single point of filing for life insurance products, was scheduled to be moved up the approval ladder at the National Association of Insurance Commissioners after press time.
The draft of the compact, as it stands, would create a single body to oversee the approval of individual and group annuity, life insurance, disability and long-term care products.
The NAIC leadership, the National Conference of Insurance Legislators, and the American Council of Life Insurers all support the current draft and the effort in general. ACLIs board is scheduled to vote on the issue Oct. 13.
NAIC and NCOIL have said the compact is the best way to show there is no need for federal regulation of insurance.
The National Conference of State Legislatures, Denver, is monitoring the compacts progress and will discuss it further during a December meeting, says Cheye Calvo, program manager–employment and insurance issues.
While large states like Illinois and New York have indicated support for the compact draft, other big states, including California and Florida, have questions about the right of states to opt out of the compact if regulators believe standards in their states are more rigorous. The compacts standards are also a concern for the American Association of Retired Persons.
And some consumer advocates, such as Kevin Hennosy, publisher of SpreadtheRisk.org, Kansas City, Mo., say there are better alternatives to the compact form of regulation. Hennosy notes problems such as changing points in the compact after it has been enacted by states.
The compact, first announced in March, is on a fast track at NAIC so it can be ready for the 2003 legislative sessions.
As it currently stands, the compact gives a state insurance commissioner the right to opt out of a compact standard if there are “specific findings of fact and conclusions of law based on a preponderance of evidence” warranting the deviation from the compact standard. This is a more exacting standard than in previous drafts.
The language in the latest draft also presumes that the compact representative will be the state insurance commissioner unless a state maintains that another representative is warranted.