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ACLI Slaps NAIC On Compact, Gets It Back

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After the American Council of Life Insurers warned regulators that a compact project for a single filing point for life insurance products could be heading for a ditch, the ACLI was accused of “speaking out of both sides of its mouth” on the issue.

“Are we heading in the right direction or are we heading for a ditch? There is serious danger that it will fail to meet its objective,” said Diana Marchese, representing the ACLI, Washington.

The remarks concerning an effort by the National Association of Insurance Commissioners, Kansas City, Mo., to create an interstate compact for life insurance product filings were made during the NAICs summer meeting here.

Those remarks surprised Alabama Commissioner Walter Bell, who is heading up the effort. He responded to ACLI comments by stating that he thought all parties were happy with the projects speed and progress.

NAIC President and South Carolina Commissioner Ernst Csiszar said, “I recall very vividly [the ACLI] saying that we can live with any standards as long as they were uniform. I dont think you should be playing both sides of the game. Standards [for the compact] will be in place by December. ACLI cannot speak out of both sides of its mouth on this one.”

Of ACLIs criticism, Csiszar said, “I am personally upset about it. We are trying to do our darndest to get standards in place. Im rather ticked. This is an area in which we are finally making progress and doing it quickly.”

The ACLIs comments “seem almost Machiavellian in a way,” Csiszar continued. “They are really setting us up for failure and Im wondering if that is really what they want so they can go to the Feds and say that we cant get anything done.”

During her comments at a regular quarterly session designed for insurers and regulators to dialogue on issues, Marchese said the reason the compact project could be “significantly off course” is that standards of a minority of states rather than the majority of states are being incorporated into compact standards.

Marchese said the current direction could repeat efforts “similar to the failed CARFRA.” CARFRA was the predecessor to the interstate compact effort.

The premise of regulators, according to Marchese, is that a “minority” of states have higher standards and that decision-making is being left to a handful of states.

Marchese added that the effort was at a fork in the road in which it was important to balance speed with an end product that is useful.

In response, Bell said it sounded like the discussion was about lowering standards and that since most companies are national and are filing products in states including “minority” states, they were adhering to the requirements in those states anyway.

ACLI representative Miriam Krol, who has been participating in the development of the standards said the point is to warn regulators of ACLIs viewpoint now rather than 2 years down the line.

The point is not to criticize, Krol added, but rather to emphasize that if the requirements of a few states become the standard, then ACLIs members may have a problem using it.

Bell said NAIC wants to continue working with ACLI but also noted that the whole process has been a very open, deliberative one in which the ACLI has had opportunity to comment.

“This is not going to be a race to the bottom or the top,” he added of the effort to create uniform standards. Bell also said it is important to look at the market share of business states have when creating standards.

In his comments, Csiszar mentioned that a health insurance compact has been suggested by Americas Health Insurance Plans and that the NAIC is open to such an option.

Reproduced from National Underwriter Edition, June 18, 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.


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