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Compact, Broker Issue Top Regulators Agenda

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If insurance regulatory issues at the end of 2004 are still an open book, next years workload promises to be a tome.

State insurance commissioners attending the winter meeting of the National Association of Insurance Commissioners, Kansas City, Mo., discussed issues on which they will work both at the NAIC and in their own states.

The broker compensation issue was hands down the most cited point of concern and work that commissioners say they face next year.

At one session during the meeting, NAIC President Diane Koken, who is Pennsylvania insurance commissioner, said making the interstate compact operational also will be a key effort of state insurance regulators.

Indeed, of 7 insurance commissioners interviewed by National Underwriter, 4 said it would be a top item in their states and 1 other expressed support but was not sure how it would be received by the states legislature.

Koken said 9 states have enacted the interstate compact and 33 standards are now in place.

Other items that Koken says will be priorities are more and better solvency tools, better risk assessment and enactment of the market conduct model act adopted earlier this year. The model reflects work done by NAIC and the National Conference of Insurance Legislators, Albany, N.Y.

Market conduct efforts also will include more effective and centralized data collection, and more uniform exam procedures, she said. In 2005, there also will be a focus on continuing to forge relationships with Congress, she added.

Alabamas Insurance Commissioner Walter Bell, who is heading up the Interstate Compact Product Standards working group, said work on the compact that has up to now focused on life and annuity products can be expanded to include personal lines of insurance.

Of the broker compensation issue, he says, “it is not an easy fix,” but commissioners will be focusing on a solution in 2005. “Trust” is the crux of the issue, he says.

In Alabama, Bell says he wants to put a multi-year renewal process in place for producers that would allow licenses to be renewed every 2 years.

Doug Dean, Colorado commissioner, said his state was one of the first to enact the compact and he thinks it is possible that in 2005 it will reach the full 26 states needed to make it operational.

In Colorado, according to Dean, efforts will be made to enact the market conduct model as well models affecting regulation of viatical settlements.

Also during the meeting, Joel Ario, Oregon administrator and NAIC vice president, cited the need to continue progress begun on market conduct analysis, which he said has reduced the number of exams and coordinated market conduct exams.

Connecticut Insurance Commissioner Susan Cogswell cited the interstate compact and work on the broker compensation issue as areas she and other regulators will be focusing on in 2005. “Obviously, we have a long road ahead this year as evidenced by the hearing and the impact of the broker hearing. We are bringing clarity to both the industry and consumers.”

It also will be important to continue to be involved in discussions on the State Modernization and Regulatory Transparency Act, she said. “It is early on in the process and it is extremely important to remain a presence in Washington.”

Cogswell says the effort will be made to get her department staff more comfortable with market conduct changes being developed at the NAIC.

Consumer health issues both at the NAIC and in Kansas will be a focus for Kansas Insurance Commissioner Sandy Praeger. In Kansas, work on building business-health partnerships will continue in 2005, she said.

Acting Illinois Insurance Director Deirdre Manna said Illinois is one of the states on the NAICs task force to examine the broker issue. “Obviously, it is an issue as the results of the Spitzer investigation show.”

She says it is important to put preventive measures in place and to do so uniformly.

Manna also said she hopes the interstate compact will be introduced in the Illinois legislature in 2005.

The American Academy of Actuaries, which assists the NAIC in reaching many of its goals by providing actuarial and technical expertise, said some of its public policy goals include supporting regulators in moving to principal-based actuarial reserves and capital adequacy and providing an unbiased analysis of President Bushs 2005 agenda, including Social Security and tax reform.

Reproduced from National Underwriter Edition, December 16, 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.