A regulatory system that creates a single point of filing for life insurance products is currently up for review in 14 states.
The Interstate Compact Model Act of the National Association of Insurance Commissioners, Kansas City, Mo., already has been enacted in Iowa. Twenty-six states are needed before the compact is up and running.
The American Council of Life Insurers, Washington, is speaking to state legislators in an effort to get them to advance the compact, says Patricia Parachini, senior director with the ACLI.
ACLI is devoting staff personnel or insurance company representatives to advance the compact in states in which a commissioner expresses support for the model, she says. The trade group is devoting as much effort to the compact and state regulation as to work on an optional federal charter proposal, she says.
By and large, bills have been introduced that maintain the uniformity sought by life insurers and regulators at the NAIC, says Parachini.
In Kansas, a resolution has been introduced that will pave the way for the compacts adoption next year, she says.
A bill is also up for review in Indiana, although ACLI is expressing concern over a change to wording in the NAIC model that it says could create a lack of uniformity.
The concern, Parachini says, relates to the exclusion of the term “full force and effect of the law” which makes it conceivable that Indiana could be deemed to have laws separate from compact requirements. Although the term “binding effect” in the compact language could be interpreted to allay any misgivings, she says ACLI is still concerned that companies could be faced with liability. Given this possibility, if the wording is not amended, she says that companies may choose to file with the state of Indiana rather than with the compact commission.
The NAIC is continuing work on the compact with the development of standards for life products that will be approved through the future compact commission.
Bylaws for the compact also are being developed that will govern the running of the compact. States participating in this process will include the 6 largest states by life and health premium as well as mid-sized and smaller states that will be chosen through regional NAIC zones.
Reproduced from National Underwriter Life & Health/Financial Services Edition, February 27, 2004. Copyright 2004 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.