The proposed Office of Insurance Information currently before Congress was among the issues state insurance commissioners discussed last week during their gathering in Chicago.
The meeting of the National Association of Insurance Commissioners, Kansas City, Mo., also picked over a proposal by the Securities and Exchange Commission, Washington, to bring indexed annuities under the SEC’s oversight.
The OII came up as part of a broader overview of bills that the NAIC continues to track, according to interviews with insurance commissioners at the meeting.
Roger Sevigny, NAIC president-elect and New Hampshire insurance commissioner, said that the group continues to work with Congress on the proposal.
The NAIC was working with Rep. Paul Kanjorski, D-Pa., and his staff to reach accord on language that defines an agreement in the bill, H.R. 5840, says Sevigny.
Crafting of the definition is considered important because it would limit authority that federal regulators already have and would not preempt current state authority.
Sevigny reiterated the NAIC’s “vehement” opposition to an optional federal charter proposal.
The commissioners’ meeting also discussed a proposed rule, 151A, which would define the terms “annuity contract” and “optional annuity contract” under the Securities Act of 1933.
The proposed rule also would exempt certain insurance companies from filing reports under the Securities Exchange Act of 1934 for indexed annuities and other securities registered under the Securities Act.
Susan Voss, Iowa insurance commissioner and NAIC secretary-treasurer, said that “we need to demonstrate to the SEC and unfortunately, many state securities regulators, that there is not a problem” with the sale of these products.Voss said Iowa represents 44% of that business.
The NAIC asked for a 90-day extension of the SEC’s comment period so that state commissioners could discuss the proposed rule at its fall meeting in Washington Sept. 22-24.
Although the comment period ends Sept. 10, the National Conference of Insurance Legislators, Troy, N.Y, requested in an Aug. 18 letter to the SEC a 120-day extension so that it also could discuss the issue during its annual meeting Nov.20-23.
The letter, written by NCOIL President and state Rep. Brian Kennedy, D-R.I., raised concern over the ability of state insurance regulators to gauge the impact on consumers.
Additional letters requesting more time to study the issue were submitted by the Coalition for Indexed Products and by 18 representatives of Congress.
Former North Dakota insurance commissioner Jim Poolman, now an industry consultant, said that there are already sufficient protections for consumers. In addition to a suitability regulation, the NAIC is also working on a senior designations model to protect consumers buying indexed annuities.
Poolman argued that the equity indexed annuity is not a security because of its fixed element and because of the insurer’s responsibility to honor obligations.
The current market conduct annual statement that is being developed by the NAIC could be used for indexed annuities, he said.
Much of the mid-August commissioners’ meeting was devoted to s search for a new NAIC executive vice-president and chief executive officer, Sevigny said. Two search firms are trying to find a replacement, a process he says could take 3 to 6 months. No one has been interviewed for the position yet, he said.
“We want to make sure that we absolutely make the right choice,” Iowa’s Voss added. There are diverse opinions over what qualifications a replacement should have, she said.
The commissioners’ meeting also included a discussion of possibly relocating a limited number of NAIC staff as well as the new CEO to Washington, Voss said. If that occurs, NAIC operations would remain in Kansas City, she added.
Asked to comment on complaints of a revolving-door trend between members of the NAIC and insurance companies, Sevigny and that all commissioners are accountable to their own state’s ethics laws.
That debate was precipitated by the recent announcement that Alabama insurance commissioner Walter Bell, a former NAIC president, would accept a lobbying position with Swiss Re.
Sevigny noted the NAIC adopted guidelines in March 2008 on the revolving-door issue but argued that the NAIC has no authority to act. (The relevant NAIC guidelines can be found )