ACLI Resolution Supports NAIC Product Approval Interstate Compact
During the annual meeting of the American Council of Life Insurers here, its board voted unanimously to adopt a resolution regarding the latest draft of the product approval interstate compact proposal of the National Association of Insurance Commissioners.
The ACLI notified NAIC President Therese Vaughan of its decision in a letter that said it fully appreciates “the challenge you have faced in balancing competing interests and producing legislation that can be supported by legislators, regulators and the industry alike.”
Noting that the ACLI “remains committed to a dual track approach to regulatory modernization,” the resolution states that the Sept. 27 compact draft is “consistent with the ACLIs objective of improving the uniformity and efficiency of the state-based process of product regulation.”
The resolution says, however, that “any material weakening of the key operative provisions of the proposal, such as the regulatory opt-out and the binding effect of the compact product standards, would be inconsistent with the ACLIs stated objectives.”
If the Sept. 27 draft is approved by the NAIC “without material changes,” the resolution states, “ACLI staff is instructed to seek enactment of this legislation in those states where the insurance commissioner is seeking enactment of or actively supporting the legislation.”
The resolution states that ACLI “will also seek inclusion of long-term care insurance as a covered product line.”
Finally, the resolution states that the ACLIs CEO Oversight Group on Improving State Regulation will determine whether the final compact legislation approved by the NAIC is “materially consistent with the September 27 draft” endorsed by the ACLI board.
A couple of days after this resolution was approved, a panel discussion on regulatory modernization was held at the ACLIs annual meeting and the compact was one of the areas discussed.
Frank Fitzgerald, Michigan insurance commissioner, who has been one of the leaders in moving the compact ahead at the NAIC, said he was gratified by the ACLI boards support.
Looking ahead, Fitzgerald spoke about some of the challenges the compact will face. Getting states “where the regulatory thicket is rather lush” to go along with the compact effort will be a big challenge, he said.
Getting approval will be challenging at the commissioner and legislator level, Fitzgerald said, and legislators need to hear “a lot of why” on the issue.
Another challenge, according to Fitzgerald, “will be to transfer the enthusiasm built up at the NAIC for the compact to the 20 or so new commissioners who will come into office in the new year.” That is why the NAIC “wants to get as much done on it as possible by year-end,” the commissioner said.
When asked how he would measure the success of the compact, Fitzgerald said he thought it would take two to three years to get it in place and there will need to be 26 states on board for it to be operating. “Well be working as hard as we can in 2003 to get these approvals,” he said.
He added that he sees a compact with 40 states as being a success, with “the ultimate success” being 51 states and jurisdictions.
Regarding the compacts prospects for success, William B. Fisher, vice president and associate general counsel, Massachusetts Mutual Life, said that speaking for himself (and not his company or the ACLI), the compact had the potential “to be a big success or a big failure.”
Two things will be crucial to the outcome, he said. First, it will need support at the state level and if it does not have the support of a critical mass of the states, especially the big ones, it probably wont succeed.
Second, he said, the marketplace will determine the compacts success. How it goes about its processes and set standards “will be crucial,” Fisher said.
Reproduced from National Underwriter Life & Health/Financial Services Edition, October 21, 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.