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Regulation and Compliance > State Regulation

Compact Commission Debates Filing Access

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State commissioners here for the fall meeting of the National Association of Insurance Commissioners voted against allowing public access to product filings that are waiting for action from the Interstate Insurance Product Regulation Commission.

The vote came after insurers warned that amending the current public access policy would make them less likely to use the IIPRC filing system.

Birny Birnbaum, a consumer advocate who receives funding from the NAIC, Kansas City, Mo., to represent consumers in NAIC proceedings, called the insurers’ argument “a sham.”

The IIPRC is trying to increase the number of product filings flowing through the IIPRC, to make the system profitable and self-sustaining.

The IIPRC system has handled 117 product filings, getting approvals in an average of 25 states per filing, with an average turnaround time of 31 days, according to Frances Arricale, the IIPRC’s executive director.

Representatives from many major insurers said they would be wary of using a system that would make information about their newest products available to competitors. These companies said they either have used the IIPRC system to file products, plan to use it in the near future, or plan to use the system when more standards are developed.

These companies “need to protect intellectual property,” said Michael Lovendusky, who spoke for the American Council of Life Insurers, Washington.

Randi Reichel, who spoke for America’s Health Insurance Plans, Washington, joined Lovendusky in opposing a filing public disclosure proposal.

Birnbaum, the funded consumer rep, who said he also spoke for the Consumer Federation of America, Washington, and the Center for Insurance Research, Cambridge, Mass., said the problems at American International Group Inc., New York, and Wall Street in general, demonstrate the need for greater transparency.

“The meltdown was due in a large part to the need for greater transparency and greater accountability,” Birnbaum said.

Insurers are, in effect, saying that if state regulators do not do what they want, they will stay away from the IIPRC, and “state regulators will look inept to Congress,” Birnbaum said.

“Where will this stop?” Birnbaum asked. “Will insurers threaten to not use the commission if there is another rule that they don’t like that is put into effect? Some of these people are using the AIG crisis to say that there should be federal oversight. Why would you count on the words these folks say when at the same time they are doing their best to undermine state-based regulation?”

Birnbaum reported that, in many states, product filings become public when they are filed.

A recent IIPRC survey taken between July 16 and Sept. 2, found that 44% of the responding states provide access to pending filings, 68% provide access to disapproved filings, and 59% provide access to filings that are withdrawn.

In states that do make product filings public, company filings are open to everyone, including competitors, and that has not made a major difference in the market, Birnbaum said.

Maryland state Sen. Delores Kelley, D-Baltimore, said the focus should really be on developing strong product standards.

“The feds should have been regulating,” Kelley said. “State regulators are doing their jobs. There are no short sales and no credit swaps.”

Separately, it was agreed that at least for the time being, a flat fee for product filings would not be used because it was too difficult to come up with a flat fee, in part because state filing fees can vary from $20 to as much as $6,000.


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