NU Online News Service, Nov. 11, 2:05 p.m. – State insurance regulators, insurers and consumer groups are still debating how the draft of an interstate life insurance product filing compact should treat consumer advocates.
Industry representatives sparred with consumer group representatives last week over a $600,000 consumer group funding proposal during a warm-up working group session organized by the National Association of Insurance Commissioners, Kansas City, Mo.
The compact would create a “single point” that life insurers could use to file information about new and changed products in all participating states. NAIC leaders say creating a filing compact would be the best way to maintain state authority over insurance product regulation. The NAIC is scheduled to vote on the proposed compact in the next few days, and it has already won support for the compact concept from the National Conference of Insurance Legislators, Albany, N.Y., and the American Council of Life Insurers, Washington.
Consumer advocates said they need a formal role in the commission that would run the compact, not just the advisory role that has been proposed by regulators.
“The compact is something new,” said Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas, one of the groups supporting the proposal. “A national standard for products transfers a tremendous amount of authority to the commission.”
But NAIC President Terri Vaughan said the NAIC “was not thinking in terms of those kinds of numbers.” The proposed 2003 NAIC budget allots $68,000 for its funded consumer representative program.
“The ACLI believes that consumers have a voice,” said Patricia Parachini, the ACLI’s senior director-state relations. “We also believe that it is the regulators’ and legislators’ jobs to protect the consumers.”
A proposal to set up a legislative committee makes sense because legislators would be relinquishing authority to the commission, but, if consumers are going to be given a formal role, then the industry should also be afforded a similar role, Parachini said.
George Coleman, a vice president at Prudential Financial Inc., Newark, N.J., urged regulators not to elevate consumer advocates to a status that they don’t enjoy in the states.
Industry representatives also wanted to know who would be paying the $600,000 bill for formal consumer advocacy.