NU Online News Service, Dec. 10, 2003, 9:56 a.m. EST, Anaheim, Calif. – California, Florida and Texas announced an alternate product filing approach here during the winter meeting of the National Association of Insurance Commissioners, Kansas City, Mo.[@@]
The states have signed a memorandum of agreement to provide a consistent set of standards for the approval of new life insurance and annuity products.
The announcement prompted an executive session that delayed the announcement of the NAIC’s new leadership, and New York State Insurance Superintendent Gregory Serio called the arrangement “reckless.”
Last July, after more than a year of work, the NAIC adopted an interstate compact model for life insurance products that was supported by the National Conference of Insurance Legislators, Albany, N.Y., and the National Conference of State Legislatures, Denver.
The compact is one of the key vehicles that regulators intend to use to streamline product filing and promote state regulation. The new incoming NAIC president, Ernst Csiszar, South Carolina director, said the development of standards will be one of the NAIC’s major goals in 2004.
Csiszar said the 3-state product approval announcement will not hurt work on the compact but, instead, will reinforce the NAIC’s efforts to create a single point of filing for products. The 3-state agreement removes desk drawer rules, but it still leaves each state’s own standards in place, he said. To have a compact, uniform standards must be developed, according to Csiszar. He noted that the 3 states have said that they will continue work on the compact.
New York’s Serio said the 3-state announcement about the new compact approach came as a surprise. The use of the I-File electronic system by the 3 states was something he had heard discussed, he said. However, Serio added that he found out about the 3 states’ announcement the evening before the states made the announcement.
“Suddenly, they tear off on their own and make an announcement that will bring more confusion to the matter than real and meaningful [advances],” Serio said.
Others interviewed at the meeting raised the concern that an alternate approach would confuse legislators and that legislators might be reluctant to address the compact issue if regulators are promoting competing approaches.
Serio agreed, saying, “There is no question about it.” He said the new approach is not the kind of merging of standards that the NAIC’s compact is striving to achieve. Uniformity of standards is what is needed, Serio said.
Serio said he hopes that the announcement is a “blip on the screen” and that California, Florida and Texas will continue to work toward the development of standards for the NAIC’s compact.
Richard Robleto, a Florida regulator, said Florida, California and Texas are very much committed to working toward enactment of the NAIC’s compact.
Robleto said the 3 states hope to start using the newly announced product filing program for annuities in the first quarter of 2004.
Robleto added that the newly announced system is not intended to supplant the NAIC’s SERFF electronic filing system.
The new system is different from the compact, in that it can be used immediately while compact standards are developed and the compact is enacted by the states, Robleto said.
“It can be done quickly, so that there is no compromise of standards,” Robleto said. “It shows the commitment to speed-to-market and uniformity of standards. No legislation is required here. It is just a process.”