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Regulation and Compliance > State Regulation

NAIC Scrambling To Make Sure All Roads Don't Lead To D.C.

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NAIC Scrambling To Make Sure All Roads Dont Lead To D.C.


The task at hand throughout 2004 will be to develop a roadmap to make sure all insurance regulatory roads dont lead to Washington, state insurance regulators contend.

The immediacy of creating paths to maintain state insurance regulation is being driven by what commissioners say is the likelihood of a bill in Congress advocating some form of federal oversight.

Following his election to the post of National Association of Insurance Commissioners President, Ernst Csiszar, South Carolina Director, assessed the situation.

“The urgency is immediate,” says Csiszar, and to wait until the original 2008 timetable in the NAICs Statement of Intent is not realistic. “The market moves too fast. The message is to get going,” he says.

For instance, in 2004, establishing standards for an interstate compact for life insurance products that the NAIC intends to have enacted in states will need to be a priority, Csiszar says.

The compact is a way to achieve uniformity, he says. Uniformity is one of the goals considered necessary to streamline state regulation.

The compact has the support of the National Conference of Insurance Legislators, Albany, N.Y., and the National Conference of State Legislatures, Denver.

Another point that will be examined, says Csiszar, is whether there needs to be a reworking of capital adequacy requirements due to global changes and standards. In fact, he confirmed that a restructuring of the work and procedures for groups like NAICs Life & Health Actuarial and Technical Task Force is possible. The groups charges may be changed to reflect the capital adequacy issue and decisions on its work made more directly by commissioners, he says.

On the issue of the new Medicare prescription drug law, Csiszar says NAIC can draft rules to help the new law be implemented smoothly.

“The process needs to move faster,” Jim Poolman, the new NAIC vice president and North Dakota insurance commissioner, concurs.

Work on compact standards is needed as well as efforts to get states to introduce the compact because its advancement “is only as good as the legislative authority given to us,” he says.

Implementation will be the focus of market conduct efforts that culminated this year with a first draft of a Market Analysis handbook, says NAIC Secretary-Treasurer Joel Ario.

Following unanimous adoption of the handbook by the NAIC “D” committee that was working on it, Ario says the handbook will be updated in 2004. Regulators market conduct work also will examine complaint analysis and underwriting guidelines, he adds.

State market conduct efforts could be more efficient if they were nationally coordinated through the NAIC, as is done on the financial side, Ario says.

Market conduct also will be a major 2004 initiative for the NCOIL, Albany, N.Y., as it advances its Market Conduct Surveillance Model act to make market conduct part of states laws, says Bob Mackin, NCOIL executive director. Regulatory modernization also will include more work on the interstate compact, he adds.

Consumer advocate Kevin Hennosy, publisher of, Kansas City, Mo., says adoption of the NCOIL model will be a key effort next year.

The introduction of new products such as life savings accounts could create even more competition as banks sell more of these retirement vehicles, says Bruce Ferguson, senior vice president-state relations, with the American Council of Life Insurers, Washington.

Although insurers also will offer such products, the heightened competition necessitates the need to accelerate work on efforts such as the compact, he says.

Ferguson estimates 12 to 14 states are in the process of introducing compact legislation.

The NAICs updated statement of intent sets a goal of at least 30 states or states representing 60% of the premium volume enacting the compact legislation by year-end 2008.

Development of compact standards at the NAIC will be important, Ferguson adds.

During a gathering of industry representatives at the recent NAIC meeting, regulators perception of immediacy was reinforced. “Congress is not going to wait until 2006-2008,” says Lenore Marema, vice president-legal and regulatory affairs, with the Alliance of American Insurers, Downers Grove, Ill. “The best defense for federal oversight is hearing that the Statement of Intent agenda is being implemented and really works.”

The NAICs Alliance for Sound State Uniform Regulatory Efficiency (ASSURE) program, an organization that advocates the need for insurance regulation, could be used to get states to implement efforts under way at the NAIC, says Robert Zeman, senior vice president and assistant general counsel with the National Association of Independent Insurers, Des Plaines, Ill.

Reproduced from National Underwriter Life & Health/Financial Services Edition, December 19, 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.


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