Ernst Csiszar, the former president of the National Association of Insurance Commissioners who now heads a major insurer group, says enforcement mechanisms are a must if a proposed federal regulatory standards bill is to have any chance of success.
In comments to National Underwriter and in several recent speeches, Mr. Csiszar has suggested that the enforcement mechanisms for the proposed federal legislation be based on language in the Gramm-Leach-Bliley Act of 1999.
GLB mandated creation of a National Association of Registered Agents and Brokers to oversee the producer side of the industry if 29 states had not enacted rules creating state reciprocity for producer licensing within three years.
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The U.S. House Financial Services Committee is drafting the State Modernization and Regulatory Transparency Act that would create federal standards for state regulation (see related story on page 6).
While making clear that “this is not something I am advocating,” Csiszar said a likely scenario is that when SMART moves to the U.S. Senate, support could grow for mandating an optional federal charter within three years if a specified number of states do not comply with the federal standards provision.
“It would be the only leverage Congress would have over the states to comply,” added Csiszar, who resigned last year as South Carolina’s director and NAIC president to become president of the Property Casualty Insurers Association of America, Des Plaines, Ill.
“Having been part and parcel for six years in the regulators’ world, I am having difficulty grasping how our state-based system of its own volition is going to respond to change,” Csiszar said.