NAIC, Regulators Need To Act Before Congress Threatens Action
Its getting to be a familiar refrain. The 50 states and the District of Columbia develop confusing, overlapping and inefficient procedures for performing certain core regulatory functions.
Insurance companies complain about the lack of uniformity and unnecessary expenses in the system. The states and the National Association of Insurance Commissioners promise to try and do something about it, but despite sincere efforts, any improvements are marginal, at best.
Then, Congress gets into the picture. The committee with jurisdiction over insurance holds a hearing during which committee leaders threaten to introduce legislation unless the system improves.
In response to either the threat of legislation or the actual passage of legislation, some improvements are finally made. But this entire process takes several years, and the improvements are only sufficient to reduce the heat from Congress for a few years or so.
There has to be a better way. The states and the NAIC need to find some mechanism that will allow them to respond more quickly to changes in the marketplace and achieve the necessary regulatory reforms without the constant badgering from Congress.
Failure to do so could lead to a more active and direct federal role in insurance regulation which many in the regulatory community and the industry will not like.
The most recent issue to come before Congress was market conduct. The U.S. General Accounting Office released a study during a House Financial Services Subcommittee hearing saying that state regulation of market conduct lacks effectiveness.