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Consumer Reps Urge NAIC To Review Policy On Models

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Funded consumer representatives at the National Association of Insurance Commissioners are urging the organization to rethink its new model law policy.

In a letter dated Sept. 10, four consumer reps detailed why they think the policy, announced last spring, is not in the best interests of consumers or the organization, based in Kansas City, Mo. The letter is signed by Brendan Bridgeland, executive director of the Center for Insurance Research, Cambridge, Mass.; Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas; Mila Kofman, associate research professor with the Health Policy Institute at Georgetown University, Washington; and, Bill Newton, executive director of the Florida Consumer Action Network, Tampa, Fla.

The letter begins by noting that there was no public discussion over the change in policy and that the new model law procedures “continue to wreak havoc at the working group and committee level.”

It asks NAIC leadership, including NAIC President Walter Bell, why procedures were changed and why these changes were done in executive session without public input.

Bell, who is also the Alabama insurance commissioner, has emphasized that the new policy will create standards that are more uniform across states and as well as require greater commitment from commissioners who vote for a model at the NAIC’s executive committee and plenary session. The new policy requires two-thirds of commissioners to vote for the model and a commitment on the part of commissioners to get the model adopted in their states.

The consumer reps’ letter goes on to note that “despite the NAIC routinely presenting itself as an organization of public officials–either in letters and testimony to Congress and Governors, or through agreements with public officials of other countries–the NAIC operates like a private organization without the public records or public meeting requirements that apply to its individual members.”

In addition, the letter states that “the fact that a model law is not adopted by a majority of the states does not mean that the model law has not affected policy development in the states.”

In fact, it goes on to say that “many NAIC models establish standards for consumer protection that are influential in state legislative development.”

The letter also asks the NAIC leadership why adoption by a majority of states would be the only criteria used to measure success. It suggests that model laws can be part of advocacy in the legislative development process.

The consumer advocates urge that the NAIC policy focus on “a strong consumer protection standard” as well as eliminate “the second-class product of ‘guidelines.’ “

They further suggest that the criteria for adopting model laws should be either a simple majority or the creation of a system of weighted voting based on state population.

On the issue of public policy discussion, Birnbaum says that when the NAIC goes before Congress or to a foreign country to discuss insurance matters, the organization acts as a public policy group. However, he continues, when it comes to open records, then the NAIC counters that it does not have to open up such records because it is a private organization.

He asks why the organization does not file an IRS 990 form, an annual return that provides information including financials, like other non-profit organizations. NAIC has non-profit status but has a budget of over $50 million, according to Birnbaum.

He also noted concerns regarding former NAIC presidents and high-profile commissioners leaving their posts in order to accept positions in the industry or positions as lobbyists.

On the issue of distinguishing between guidelines and model laws, Birnbaum says that under the new policy, “it becomes clear that guidelines become meaningless.”


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