Both consumer advocates and insurers called on commissioners to open up their meetings so that input could be offered on what they say are “substantive” changes to a policy of the National Association of Insurance Commissioners.
The catalyst for the criticism during the NAIC’s summer meeting here was a change in a model law policy that will separate out models targeted for widespread uniform adoption by two-thirds or more of state commissioners and other proposals, hence to be called guidelines, that will not be prescriptive.
Birny Birnbaum, an NAIC-funded consumer representative, said he would rather be talking about substantive issues such as the repeal of the McCarran-Ferguson Act or stranger-owned life insurance, but that the NAIC’s closed-meeting policy on the development of a “fundamental” change to its model law development illustrates a failure to involve its stakeholders.
Birnbaum asked why the meetings that led up to the announcement were done in executive sessions. He also called on the NAIC to hold a public hearing on the issue and, based on the feedback offered during that hearing, make a decision on whether to proceed with the model law policy change.
The new policy may have merit, but because stakeholders did not have the opportunity to listen to discussions about why it should be implemented, there is no way to determine this, he said.
In response, NAIC President-elect and Kansas Commissioner Sandy Praeger said, “Change is difficult and we all recognize that it is natural to have some resistance.”
However, she added, rather than spend 2 years developing a model, it is better to look at it upfront. “We don’t have the luxury of spinning our wheels on a model that doesn’t go forward.”
Dave Snyder, a representative for the American Insurance Association, Washington, said public input on the model change would be appropriate. He asked about the legal significance of best practices guidelines for work that is not considered model status even though it is recommended as a best practice.
In response, Praeger noted that model laws do not become law until a state takes action. The time devoted to determining whether work should be a model will provide opportunity for dialogue, she said.
Steven Poizner, California insurance commissioner, said priorities will be important going forward because state regulators have challenges they will have to meet. Among other things, he said, the system has been criticized for being cumbersome as a decision-making process and slow to respond to a global economy. However, he continued, if one considers the aftermath of Hurricane Katrina, it becomes “crystal clear” that states, not the federal government, were protecting consumers.