State legislators continue to press state insurance regulators to examine the process by which they develop regulatory requirements.
In a May 3 letter written by Sen. Alan Sanborn, R-11th District-Mich., president of the National Conference of Insurance Legislators, Troy, N.Y., NCOIL questioned the accreditation process of state insurance regulators.
“Disregarding questions of authority, NCOIL believes that the manner in which models are chosen as accreditation standards has been subtly degraded over the years–and perhaps, in a manner of speaking, when no one was looking,” wrote Sanborn to Walter Bell, president of the National Association of Insurance Commissioners and Alabama insurance commissioner.
The letter continued, “Since the accreditation program was broached in the late 1980s and early 1990s, NCOIL has challenged the NAIC over its proposed sanctions of companies in unaccredited states, inserted essential NCOIL amendments to proposed accreditation models, and–when a rush to include more standards occurred–insisted on a responsible and measured procedure for adding new models or amendments.”
NAIC procedures, according to Sanborn, have cut back the 3-year exposure period proposed by NCOIL to 2 years, and now have cut that time frame down to 1 year.
Language regarding cost for compliance and the impact on states has been “weakened” with an additional “caveat” “if reasonably quantifiable,” Sanborn noted.
An April 2 NAIC response stating that “‘from start to finish, the entire process to consider amendments and additions to accreditation standards spans nearly 5 years,’ while perhaps technically accurate, seems a bit disingenuous,” Sanborn wrote.
He explained that 2 of those 5 years give legislatures no choice: They are required by the NAIC to adopt the model and remain accredited. So, he continued, states are left only 1 year to expose the model after the NAIC deems the model or revision to the model a potential accreditation standard.