An alternate product filing approach announced by three large states was called “reckless” by New York Insurance Superintendent Greg Serio.
California, Florida and Texas signed a memorandum of agreement to provide a consistent set of standards for the approval of new annuity and life insurance products. The agreement was announced during the winter meeting of the National Association of Insurance Commissioners, prompting an executive session that delayed the announcement of the new leadership.
Last July, after over 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 and the National Conference of State Legislatures.
The compact is one of the key points that regulators intend to use to streamline product filing and promote state regulation. In fact, the new incoming NAIC President, Ernst Csiszar, South Carolina director, said the development of standards will be one of the NAICs major goals in 2004.
Csiszar says the announcement will not hurt work on the compact but rather will reinforce NAICs direction of creating a single point of filing for products. The agreement among the three states removes desk drawer rules but still leaves each states own standards in place, he says. In order to have a compact, uniform standards must be developed, Csiszar says. He notes that the three states had said they will continue work on the compact.
New Yorks Serio said the announcement and the new compact approach came as a surprise. The use of the I-File electronic system among the three states was something he had heard discussed, he said. However, Serio added that he found out about the announcement on Saturday evening prior to the Sunday 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].”
Interviews at the meeting raised concern that an alternate approach would confuse legislators when they try to get the NAICs compact enacted in state legislatures and that legislators might be reluctant to address the issue if two approaches are being advocated.
Serio agreed, saying, “There is no question about it.” He said the new approach is not a merging of standards as the NAICs compact is striving to achieve. Uniformity of standards is what is needed, Serio said, adding he is hopeful this is a “blip on the screen” and that the three states will continue to work toward development of standards for the NAICs compact.
Richard Robleto, a Florida regulator said Florida and the other states are very much committed to working toward enactment of NAICs compact.
He says a single filing system is used and that the program will initially be used for annuities and have three states for starters. It will be up and running in first quarter 2004, he says, adding that the system is not intended to supplant the NAICs 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 in states, he says. “It can be done quickly so that there is no compromise of standards,” he adds. “It shows the commitment to speed-to-market and uniformity of standards. No legislation is required here. It is just a process.”
Reproduced from National Underwriter Life & Health/Financial Services Edition, December 12, 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.