The threat of an optional federal charter is one factor encouraging a turnaround in relations between state insurance legislators and regulators, industry observers noted during the spring meeting of the National Conference of Insurance Legislators here.
A theme that threaded through several of the sessions at the meeting was how state regulation of insurance could better serve consumers than a federal regulator and how all state public officials need to work together to offer tangible proof about why this is so. In fact, NCOIL adopted a resolution opposing an OFC at the meeting.
A portion of the industry maintains that having the choice of national regulation is an important option as insurers face global competition. The American Council of Life Insurers and the American Insurance Association, both in Washington, support an OFC. In fact, the ACLI commissioned a just released study by two academics, Martin Grace and Robert Klein from Georgia State University that found the growth of insurance regulatory expenses appears to be outstripping inflation and general employment growth.
At press time, both Rep. Brian Kennedy, D-Hopkinton, R.I., NCOIL’s new president, and Sandy Praeger, Kansas insurance commissioner and new president of the National Association of Insurance Commissioners, said they had not read the report and declined comment.
But both left no doubt where they thought consumers would be best served. During a panel in which all members of the NAIC 2008 leadership participated, Praeger noted, “We are unified in presenting our ability to protect consumers in our states. … Do you want to call someone in your state who understands the issues or a 1-800 federal number?”
Kennedy said he doubts there would be cost savings with a federal regulator, noting that at least in Rhode Island cost-cutting efforts are making state government lean. He asked rhetorically if it is better to turn over insurance regulation to a federal system that would do nothing to help consumers in his state, consumers who are also his constituents.
State insurance regulators and legislators need to “head off further rhetoric about an OFC,” according to Kennedy. He pointed to ideas such as one described during a session by Texas Insurance Commissioner Mike Geeslin.
Geeslin outlined a plan that would allow state regulators and legislators to be able to go to Washington and have something to discuss about how state regulation is more efficient if an OFC bill is introduced in 2009 or 2010. He noted during his presentation before legislators that this option was being looked at in Texas and was just one of a number of options being considered by the NAIC.
Among the points in the framework he presented are: