BY ARTHUR D. POSTAL
NU Online News Service, May 18, 2005, 2:00 pm. EDT
The NAIC’s recent response to Congress’ efforts to draft insurance modernization legislation apparently is not sitting well with a leading member of the House Financial Services Committee.[@@]
In a letter to NAIC executives, Rep. Richard Baker, R-La., chairman of the panel’s Capital Markets Subcommittee, took issue with the NAIC’s recent strong criticism of the committee’s work on the issue.
Baker also told the NAIC officials that he would not meet with them until they submitted their own proposal for reform.
One congressional source called Baker’s letter “very strong.” The source, who opposes the legislation in principle, nevertheless said that for the committee to put its thoughts on paper in such language is “extraordinary.” The language, the source said, “reflects the extreme disappointment of the committee at the recent actions of the NAIC in opposing modernization legislation.”
The committee’s Republican leadership wants to have draft legislation ready by this summer, representing a consensus of all views, according to the source. The latest missive may provide the committee political cover if the NAIC and other state officials, such as governors and legislators, later complain that they had no input in the final bill.
Baker’s staff would not comment on the letter, nor would Rep. Mike Oxley, R-Ohio, chairman of the full committee. An NAIC official in Kansas City said he did not know about the letter.
Copies of Baker’s letter were obtained late Tuesday by the National Underwriter.
The letter implied that the NAIC leadership is seeking to delay congressional action indefinitely by not participating in drafting the legislation, which would establish federal standards for state regulation of insurance.
It was prompted by a May 9 letter from Diane Koken, president of the NAIC and Pennsylvania insurance commissioner. The letter sought to delay further a meeting between Koken and Baker on NAIC input into the legislation, known as the State Modernization and Regulatory Transparency Act, or SMART.
Koken’s May 9 letter sought further delay on the meeting, which had apparently been scheduled originally for April 28.
Baker’s letter responded to an earlier letter from the NAIC that, he said, transmitted 35 pages of objections “to virtually all aspects of the proposed SMART Act.” That letter made it “quite clear the organization’s position on meaningful reform,” Baker charged
Baker added that he thought it important the NAIC take a leadership role in the modernization effort.
“Accordingly, I invite you to submit for my consideration a meaningful, enforceable and effective proposal for federal legislative action that will achieve the necessary reform,” he wrote.