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Regulation and Compliance > State Regulation

States Hope To Ward Off Federal Producer Regulator

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The National Association of Insurance Commissioners wants to keep national regulators from gaining control over supervision of insurance agents and producers.

New Hampshire Insurance Commissioner Roger Sevigny, vice president of the NAIC, Kansas City, Mo., described a strategy for preventing that outcome here at a policyholder advisor conference presented by Anderson Kill & Olick P.C., New York.

The producer regulation issue is surfacing because the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 required states to establish uniform producer licensing requirements or else cede responsibility for producer regulation to a new National Association of Registered Agents and Brokers.

The states met the act requirements well enough to avoid triggering the creation of NARAB, but now some industry groups say states have diverged from uniformity enough to fall out of compliance with the act, Sevigny said.

The NAIC is preparing to discuss a proposal next week, at the NAIC fall meeting in Washington, that would make sure that states continue to maintain uniform producer licensing standards, Sevigny said.

Regulators would get industry group ideas about standards that ought to be included in the review, then visit states to clear up minor discrepancies on the spot.

In some cases, states might need to pass legislation to clear up more significant producer licensing differences, and the recent friction between insurance regulators and lawmakers could make that problematic, Sevigny said.

But Sevigny said regulators want strong, uniform oversight of producers.

“We want that collaboration,” Sevigny said. “We don’t want to see what happened in New York, with what [former New York Attorney General Eliot] Spitzer’s investigation uncovered.”

Speaking generally about proposals to let insurers choose between state and federal regulation, Sevigny suggested that efforts to create an optional federal charter system could lead to the federal government sharing some of the premium tax revenue that now goes to state governments.


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