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Life Health > Life Insurance

NAIC Adopts Consumer Conflict Statement

By Jim Connolly

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The National Association of Insurance Commissioners has approved a conflict-of-interest policy for individuals who receive NAIC funding to speak for consumers in association proceedings.

The executive committee of the NAIC, Kansas City, Mo., and the plenary, the body that represents all voting jurisdictions, passed the funded consumer rep proposal unanimously here at the NAIC’s winter meeting.

The funded rep policy statement was developed by the NAIC’s Consumer Board of Trustees, which includes both NAIC funded consumer reps and state insurance regulators. The board is led by Wisconsin Commissioner Sean Dilweg.

The policy statement states that compensation from a “regulated entity” may compromise effective funded consumer representation.

A regulated entity could include an entity regulated by state insurance regulators, a trade group, or individuals acting as agents or representatives of a regulated entity.

If a consumer rep or an immediate family member receives compensation that may be affected by the policy, then the rep must notify the Consumer Board of Trustees and the NAIC staff within 7 days of the receipt of the compensation or agreement to receive compensation. Items that will be looked at include expense reimbursement, employment income, receipt of gifts and honoraria.

During a discussion of the policy statement, Connecticut Insurance Commissioner Tom Sullivan called the document “a good first step” and mentioned the possibility of expanding the statement beyond “regulated entities.”

Although there is no formal effort to expand the conflict statement, the possibility of raising the issue at the next Consumer Board of Trustees meeting came up during the discussion.

Birny Birnbaum, an NAIC funded consumer rep who served on the Consumer Board of Trustees during the development of the policy statement, said he wishes “the commissioners could devote the same time and effort in responding to recommendations made by consumer advocates as they do to worrying about a handful of consumer advocates who volunteer their time to come to the NAIC.”

“I would like to see the same transparency in the Capital and Surplus Relief Working Group,” Birnbaum added.

The NAIC formed the capital relief working group without a public discussion, in response to a request from the American Council of Life Insurers, Washington, for looser capital requirements.

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