When the National Association of Insurance Commissioners starts its summer meeting this week, consumer and industry representatives plan to discuss the rules governing NAIC policymaking.
The NAIC, Kansas City, Mo., is about to convene the 4-day summer meeting June 1 in San Francisco.
One major change is the implementation of a new procedure for creating model laws.
NAIC officials met in executive session this spring to develop the procedure. In an effort to increase the likelihood that new models really will shape state laws and regulations, the NAIC executive committee will have to determine that the issue that is the subject of the model requires a national standard and “uniformity” among the states.
The NAIC also plans to require that any models adopted pass by a two-thirds majority.
Consumer representatives have concerns about the use of executive sessions to develop the new NAIC model law approval procedure, according to Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas, who gets funding from the NAIC to represent consumer interests at NAIC meetings.
“The NAIC is developing a new policy on when and how it will develop model laws,” Birnbaum says. “This is its most important product, and the policy was developed in executive session.”
There was no stakeholder participation, Birnbaum says.
Moreover, a need for uniformity and the ability to gather the votes needed to meet the two-thirds majority vote requirement are not the right criteria for approving NAIC models, Birnbaum says.
In recent years, Birnbaum says, the uniformity and two-thirds majority criteria would not have worked, because state lawmakers often chose between NAIC models and models developed by the National Conference of Insurance Legislators, Troy, N.Y.
Now, if the NAIC can’t get a two-thirds majority vote for a model, a legislature may simply choose the NCOIL model, Birnbaum says.
If that’s the case, the new approach “will diminish the NAIC,” Birnbaum says. “This process was not thought through.”
Birnbaum also wants to talk about NAIC procedures for accrediting state insurance departments.
The program, which ensures that states are equipped to monitor the financial condition of insurers, has consumer representative support and ought to be expanded to include departments’ market regulation activities, Birnbaum says.
The NAIC should not have to get a model law approved by 26 states before adding it to accreditation standards, Birnbaum says.
The American Council of Life Insurers, Washington, also plans to talk about accreditation at the NAIC’s summer meeting.
One issue of interest to the ACLI is the possibility that the NAIC might include the Insurer Receivership Model Act in the accreditation process.
The ACLI has opposed making IRMA an accreditation standard.
The current receivership standard, the Insurers Rehabilitation and Liquidation Model Act, is adequately addressing the need for regulation of rehabilitations and liquidations, the ACLI says.
IRMA does not have support of most interested parties, and it should not be exposed to the states for seasoning as part of the accreditation process, given the likelihood that the model will be opposed in the states, the ACLI says.