NU Online News Service, March 25, 2003, 5:03 p.m. EST — New York
Lawmakers here for a meeting of the executive committee task force of the National Conference of State Legislatures, Denver, worried about what might happen if states fail to join forces to process new life insurance product filings.
Legislatures in Alabama, Indiana and Iowa are already considering bills that would implement a “single point of filing” model adopted by the National Association of Insurance Commissioners, Kansas City, Mo.
The NAIC created the model in an effort to ease pressure for federal regulation of the insurance industry. The model would create an interstate compact that would receive product filings for all participating states. Advocates say the compact could eliminate much of the red tape and many of the delays that life insurers now face when they roll out new products.
But all the NAIC can do is make suggestions. The state legislatures have to decide for themselves whether to participate in the product filing compact.
William Larkin, a Republican state senator from New York, talked about “what a tremendous bureaucracy would be created” if the federal government ended up creating its own insurance regulation system.
Other lawmakers worried about the effect of a shift toward partial federal regulation on the fee revenue that insurance departments generate.
Some states are as much as 20% over budget. For those states, insurance department fee revenue will be increasingly important, according to Kemp Hannon, a Republican state senator from New York.
New York State Insurance Superintendent Gregory Serio said the cost of a shift to partial federal regulation could hit even closer to home.
Insurers would probably ask for relief from the assessments that now fund state insurance department operations, Serio said.
“You could see a significant change for state insurance departments themselves,” Serio said.
Mike Hubbard, a Republican state representative from Alabama, asked Gayle Yeomans, a representative for the American Council of Life Insurers, about when the ACLI might give up on state-based solutions and focus on a federal response.
The answer is difficult to determine because the industry is not unified, Yeomans said.
But Yeomans, who is chair of the task force on product regulation at the ACLI, said that it is not the industry’s “intention to set one against the other.”
“We have a very strong interest in making the compact work,” Yeomans said.