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Oxley Lays Out A Federal Oversight Role

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New York

Congressional plans for insurance industry oversight are focused on creating a federal-state partnership structure rather than assuming total control, state regulators said after meeting in a closed session here with an influential lawmaker.

Rep. Michael Oxley, R-Ohio, who chairs the House Financial Services Committee, contemplates a “full federal-state partnership,” according to members of the National Association of Insurance Commissioners who met with him in private.

Oxley briefed a Commissioners Roundtable session at the NAICs spring meeting. Afterwards, regulators who attended said Oxley suggested his committee does not contemplate legislation that would create a federal charter, a federal regulator or a dual system. The committee is scheduled to hold a hearing on federal oversight on March 31.

Those interviewed said Oxley indicated any action would focus on a federal tools approach building on work already being done by the NAIC.

According to those interviewed, a federal coordinating council and federal appointee over that body could be named, but such an appointee would have no regulatory authority and state regulators still would be considered the experts on insurance regulation.

Oxley, they said, contemplates a “full federal-state partnership,” and in comments he pointed to the “excellent work” of both NAICs State Electronic Rate and Form Filing System and work on the interstate compact for life insurance product filing.

Asked about Oxleys reaction to the Market Conduct Surveillance model act just adopted by the National Conference of Insurance Legislators, those in attendance said that, in general, Oxley supports the NCOIL model.

Those interviewed expressed some optimism about support for state regulation of the industry. Terri Vaughan, Iowa insurance commissioner and NAIC past president, said Oxleys address took note of the NAICs Accelerated Licensing Evaluation Review Technique program for national treatment of companies. She said he was supportive of a partnership that would maintain a state regulatory system and current regulatory modernization efforts.

Larry Mirel, insurance commissioner for the District of Columbia, said he was “encouraged” with the remarks because Oxley was “very supportive of state regulation.” What was clear, he said, was that it was not just a system of federal oversight, but offered real support for state regulation.

NAIC President Ernst Csiszar told attendees during an opening session that commissioners were offered a clearer idea of thinking in the House, although the Senates position was less clear. Much of the work being sought already is being done, he said. With or without the threat of federal intervention, initiatives such as the interstate compact and market conduct efforts should proceed, said Csiszar, who is South Carolinas insurance director.

Oxley “is a realist,” said Jim Poolman, North Dakota commissioner and NAIC vice president. “He wholeheartedly supports state regulation, but wants to prod us along in our reforms with legislation.” The congressman is working with regulators and, consequently, regulators need to find common ground, he added.

Poolman said activity next month should be of strong interest to the industry when details of a federal bill or principles will be detailed, and state insurance commissioners will be discussing what should be the parameters of the NAICs response.

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