Amended Interstate Insurance Compact Moves Closer To NCSL Support
Several sticking points concerning an interstate compact that would create a single point of filing for life insurance products were removed, making it more likely that a major organization of state legislators will endorse the proposal.
The compact document adopted by the National Association of Insurance Commissioners, Kansas City, Mo., is considered by some to be a way to streamline and preserve state regulation.
Concerns regarding the Interstate Insurance Product Regulation Compact, adopted in December 2002, resulted in proposed amendments that were considered by the National Conference of State Legislatures, Denver.
An NCSL task force to streamline and simplify insurance regulation approved all but one amendment and offered an alternative for the one amendment that was not approved. It is expected that those changes will be voted on by the NAIC on July 17 and then go to back to the NCSL for full approval on July 22 during its annual meeting in San Francisco.
A group of assistant Attorneys General expressed satisfaction that new wording to a compact amendment would ensure that the compact would not diminish the authority of state Attorneys General. However, the group does not represent all Attorneys General.
And a discussion over whether definitions of the products that would be covered in the compact resulted in a drafting note that would describe insurance products covered but not a decision to include definitions within the wording of the compact itself.
The decision to describe the insurance products covered in a drafting note was made to provide legislators with information while providing flexibility for changes to products as they evolve.
The discussion weighed the need for legislators to know specifically what was encompassed in the compact with the likelihood that the compact would have to be amended periodically by legislators as products evolved. Legislators also discussed the possibility that failure to include definitions might raise concerns in state legislatures and result in delays in getting the compact enacted.
During the discussion, Bryan Cox, senior legislative director-state relations with the American Council of Life Insurers, Washington, noted that 25 states have no definition of life insurance and 21 states have no definition of annuities.
Consequently, New York State Senator Kemp Hannon, R-Nassau, who is co-chair of the NCSL task force, expressed reservations about imposing definitions on states that did not currently have definitions.
Rather, Hannon proposed that a description of the products included in the compact be included in a drafting note that states could decide whether or not to act on.
The concept received support from former NAIC President and Iowa Insurance Commissioner Terry Vaughan, who is spearheading the compact idea as well as unofficial support from the ACLI. The task force unanimously approved the proposal in a 9-0 vote.
Reproduced from National Underwriter Edition, July 14, 2003. Copyright 2003 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.