Efforts to streamline and update market conduct efforts may be state insurance regulators best response to any challenge to the relevancy of state insurance regulation, according to a consumer advocate.
During the spring meeting of the National Association of Insurance Commissioners here, regulators were told that they need to play their strong suit if they are going to counter arguments calling for federal regulation of insurance.
The creation of an interstate compact is a “tremendously misguided effort,” according to Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas. “An effective case for state regulation is not being made by trying to be more efficient. That is not going to happen.”
The reason for this, Birnbaum said during a NAIC consumer liaison meeting, is that “it points out the inefficiency of state regulation.”
The strength of state regulation, he continued, can be shown to best advantage by pointing to the “the efficiency and effectiveness of market conduct regulation.”
Birnbaum urged regulators to “make 2003 the year that NAIC makes the case for state insurance regulation.”
How? “Show that state insurance regulation is the best way to protect consumers,” he said.
That can be accomplished, Birnbaum said, if the NAIC takes action such as “to stop dragging its feet on small face amount problems.”
And, he said work needs to continue on market conduct analysis.
Iowa Insurance Commissioner Terri Vaughan, immediate past NAIC president, disagreed with Birnbaum. Vaughan championed and is spearheading the effort to establish an interstate compact that would create a single point of filing for life insurance products. The compact, she said, is a way to modernize state insurance regulation that is akin to building infrastructure in a village.
Even as Birnbaum was making his suggestion about market conduct to regulators, they were continuing their efforts to update market conduct systems.
Those efforts are occurring in a number of different areas.
The preliminary results of a data call for the life industry are now being analyzed by states and could be ready to be integrated into one set of data by the end of April, according to discussions at the spring meeting.
Life insurers submitted their responses to data requests at year-end 2002, and property-casualty insurers are currently in the process of submitting their own data.
Work continues on another phase of the market conduct effort, the market analysis guide, formerly called the “How-to” guide.