A letter from Rep. Brian Kennedy, D-Dist. 38-R.I., vice president of the National Conference of Insurance Legislators, Troy, N.Y., assailed the “closed door meetings” of the National Association of Insurance Commissioners. Kennedy contends the policy violates state sunshine laws.

In an interview with National Underwriter, Kennedy detailed the chain of events he says prompted him to write the April 30 letter and to make the issue public.

NU: What specific incidents made you feel states’ sunshine laws are being violated?

BK: I have attended the last 3 NAIC meetings in St. Louis, San Antonio and New York in the capacity of NCOIL vice president. At the San Antonio meeting [December 2006], the commissioners were meeting. I started to walk into the room and an attendant explained that it was a commissioners-only meeting. I thanked him and went into the room and took a seat. Legislative strategy was being discussed.

NU: What happened then?

BK: A NAIC staff person came over and explained that it was a commissioners-only session. I thanked the staff person and continued to listen to the discussion. A second NAIC representative, Andy Beal, came over and explained that it was a commissioners-only discussion. [Beal is NAIC deputy executive vice president and chief legal officer.]

I asked him whether the discussion concerned a budget, staff or pending litigation. I was told it did not and said there was not a reason to close the meeting.

I said I would exit the room. Outside, I saw Brett Palmer [NAIC managing director-government relations, Washington] and expressed my displeasure to him. I said it was not appropriate [to be told to leave], given that commissioners serve the states and their laws.

NU: What kind of response did you receive?

BK: Al Iuppa [then-president of the NAIC] apologized, but also said that commissioners felt it [a closed door meeting] was an appropriate thing to do. I decided to wait and see how things progressed in March.

NU: Were things any different during the spring meeting [New York, March 2007]?

BK: At the opening reception, Cheye Calvo [formerly an NAIC government relations legislation and policy manager, Washington, now establishing a private consulting practice], sought me out and told me not to attend the Commissioners’ Roundtable. He sought me out. I voiced my concerns to Cheye.

I expressed my concerns to the commissioner in my state [Joseph Torti] and said he had taken an oath of office that doesn’t stop because you attend a NAIC meeting.

At the end of the meeting, I was asked to present the commissioners an update of NCOIL activities and a summary of what happened at the NCOIL meeting in Savannah. Commissioner Bell raised the issue of open meetings.

I explained that commissioners had taken an oath of office to abide by the laws of the states and that there had not been a good reason to close a meeting. Commissioner Bell said NCOIL does the same thing.

NU: And how did you respond?

BK: I said NCOIL does not. All our meetings are open. Even if we discuss our opposition to an optional federal charter, there are people who support an optional federal charter sitting in the room who can hear the discussion.

NU: What contact have you had with NAIC since that meeting?

BK: An April 9 letter addressed to me was sent to Rep. Patrick Kennedy, D-R.I., even though my address is available. The letter raised a lot of questions. It said they [NAIC] are a private not-for-profit, not a regulatory body. If that is the case, how can they come out with accreditation standards if they have no regulatory authority?

Why are they receiving millions of dollars in yearly fees [for databases] if they are a not-for-profit organization? There are a lot of questions that are coming up.

[Disclosure: National Underwriter's affiliate, Highline Data, contracts with the NAIC to disseminate data.]

NU: So, what are you going to do?

BK: I am raising these concerns with legislators across the country, including non-NCOIL members.

NU: Is more cooperation needed between legislators and regulators? In the last 11 years, only 3 of 35 NAIC models have uniformly been adopted.

BK: In baseball, those would be minor league stats.

NU: How are you going to continue the discussion?

BK: There will be a letter issued [by NCOIL] on accreditation. [It was issued on May 8, after this interview had been conducted.] There will be questions raised at our Seattle meeting. This is not a subject that is going to be dropped. Some legislators are planning to approach their states’ attorneys general and ask them to look into the matter.

NU: Doesn’t the NAIC have a right to keep some of its discussions confidential?

BK: The NAIC likes to morph into whatever it wants to be at that point in time. If it is testifying in Washington, then it is a regulatory body. If it is holding a closed meeting, then it is a private, not-for-profit organization. There is a Jekyll and Hyde mentality. It makes one ask, ‘Which are you today?’

NU: So what should commissioners do?

BK: Commissioners need to understand that they have this obligation to abide by their states’ [sunshine] laws.

NU: How will you get your message out?

BK: I will start by contacting state legislators. That will be the first step. I never expected a confrontational situation. I just think it is time to bring the issue to a head. My hope was to bring this up for discussion in San Francisco. But when I read the letter and when I saw the response [May 4 NAIC release], I realized that the NAIC had closed ranks.

NU: Do you have the same concerns about the Compact Commission [a national product filing entity created by state insurance commissioners and state legislators]?

BK: The Commission has been open so far. All the meetings have been open. Fran Arricale has done a great job. West Virginia Commissioner Jane Cline and former Pennsylvania Commissioner Diane Koken have done exceptional work. We see that as less of a problem.