It looks like the National Association of Insurance Commissioners has decided on a high-stakes strategy in the game of federal regulation, something perhaps along the lines of winner takes all. Either that or its tone deafness exceeds anything I would have thought possible.
This at least was my reaction to the audacious response of NAIC to a letter from Rep. Mike Oxley, R-Ohio, the powerful chairman of the House Financial Services Committee, and Rep. Richard Baker, R-La., chairman of the House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.
Oxley and Bakers letter essentially had asked the commissioners to become more involved in drafting the State Modernization and Regulatory Transparency Act, the major elements of which the committee had first put forth last year. It also expressed concern about the lack of communication between the NAIC and Congress in recent months.
Now, Im sure the congressmen would like input from NAIC, but Im also sure they are perfectly capable of moving ahead with or without NAICs involvement. So, their letter can be seen from one perspective as a congressional courtesy.
As reported by Arthur Postal, the NAICs response was not particularly appreciated by the committee leadership, to put it mildly. For instead of reaching back with a constructive gesture, the NAIC, through its president, Pennsylvania Commissioner Diane Koken, gave the committee the back of its hand.
SMART, Kokens letter says, “is not a concept that NAIC would suggest to Congress.”
Why? Well it seems that NAIC formed review teams to go through the SMART draft to see what its impact on state insurance regulation would be. There were five major findings (and I quote):
“1. The SMART Act would substantially and negatively impact state regulatory authority to supervise property-casualty, life, and health insurance, as well as reinsurance, by establishing federally mandated standards and preempting state laws that disagree with them.