Several leading legislators attending the annual meeting of the National Conference of Insurance Legislators here say a new study that recommends reallocating state assessments to NCOIL rather than to the National Association of Insurance Commissioners makes sense.
The report, “Study on State Authority: Making a Case for Proper Insurance Oversight,” and the proposal will receive a full review when it is discussed during a special executive committee board hearing.
State Rep. George Keiser, R-Bismarck, N.D., notes, “Certainly, the funding level of NCOIL is very limited.” If an opportunity arises that would result in “a direct and positive benefit in the development of good insurance policy,” then it is an option that should be explored, he adds. However, he points out, the difficulty could be developing a mechanism that makes it possible to redirect state premium assessments.
The funds, when compared with the total NAIC budget, suggest that it would not have a material impact on the operations of the NAIC, says state Rep. Brian Kennedy, D-Hopkinton, R.I. “The goal is to maintain state-based regulation and it seems that this would just make good sense.”
Kennedy says he does not believe that the line item in state budgets is specific to any organization but, rather is a general, discretionary line item.
The study also addresses the issue of open meetings, which has been important to Kennedy. He says progress between the NAIC and NCOIL is being made, noting for instance, that the second liaison meeting between legislators and regulators will be held on Dec. 2 at the winter NAIC meeting in Houston. But, he adds, he wants to continue efforts to open up meetings held by NAIC-related organizations such as the System for Electronic Rate and Form Filing.
The income from state premium assessments is probably more important to NCOIL than to the NAIC, given the size of the NAIC budget, says state Rep. Robert Damron, D-Nicholasville, Ky.
But, he adds, the challenge could be effecting a change in state legislatures that would make it possible for these funds to be redirected.
The recommendations are included in the second part of the study which has been under development for more than a year.
The proposal is derived from one of 6 recommendations included in the study. These include:
–Increase NCOIL funding resources and membership.
–Clarify regulatory roles; enhancing insurance regulators’ authority by restoring agencies’ stature.
–Increase legislative oversight of insurance regulation.
–Open NAIC meetings.
–Consider strengthening state insurance regulation through expansion of the interstate compact.
–Support an independent commission of stakeholders in considering how state insurance regulation can be further strengthened.
The proposed resolution to reallocate state assessments says the NAIC annually assesses each member state a fee based on the volume of a particular member state’s premium to the total premium volume of all member states. In aggregate that amount is budgeted at $2,063,932 in 2008, according to the Insurance Legislators Foundation.
The ILF says the NAIC’s revenues exceeded expenditures by a projected $2,801,418 projected in 2007.