NCOIL Comes Out Against Federal Standards Legislation
Duck Key, Fla.
The National Conference of Insurance Legislators officially came out against proposed federal legislation aimed at creating national regulatory standards for the insurance industry.
In September, NCOIL president, state Sen. Steve Geller, D-Fla., sent a letter to key lawmakers in the House outlining opposition to the State Modernization and Regulatory Transparency Act, as the legislation establishing federal regulatory standards to be implemented by the states is known.
At NCOILs recent annual meeting here, the executive committee of the body formally endorsed its presidents initiative.
The move puts NCOIL at odds with the National Association of Insurance Commissioners, which continues to work with the House Financial Services Committee in drafting so-called federal tools legislation.
For the first half of the year the 2 groups worked hand in hand, particularly in jointly developing market conduct model legislation, to impress the federal lawmakers with their seriousness in creating uniform regulation.
Geller said the initial efforts at cooperation were aimed at getting a “place at the so-called mythical table.
“But at some point you have to draw a line in the sand,” he said. “Because as legislators we all know that if we continue to take part in the process, then in the end we will have to support its outcome.”
The initial draft of the SMART legislation that came out late last summer infuriated state lawmakers, who felt that it stripped them of their powers in favor of the federal and state bureaucrats, and in particular the NAIC.
“There has been some concern that from the NAIC perspective a lot of its support has been staff-driven, because they see a greater role for themselves in the process,” Geller said. “I really dont think the NAIC has been well-served by its staff.”
Geller said NCOIL opposition stemmed from the measures rate and form deregulation, the presence of a federal regulator and federalized agent licensing, which he felt would end up in a “race to the bottom” in terms of regulatory standards.
At a forum just prior to the executive committee meeting, consumer and industry representatives clashed over the impact of the federal standards legislation.
Robert Hunter, insurance director for the Consumer Federation of America, often has found himself at odds with NCOIL, but he struck a chord with the legislators.
“This [SMART] is great for the NAIC; this is great for the regulators,” he said. “But it leaves the state legislators totally out of the mix.”
Sen. Dave Bates, R-R.I., expressed some qualms about the groups action, fearing that the alternative of optional federal charter legislation will be much worse than what is currently under discussion.
But all parties agreed that House passage of any such implementation measure was at least a year off, and Senate passage even further down the road.
Reproduced from National Underwriter Edition, November 24, 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.