New York — NU Online News Service, Jan. 24, 2009, 7:35 p.m. EST
Two top officers of the National Conference of Insurance Legislators want insurance regulators to delay action on an American Council of Life Insurers capital and surplus proposal.
The leaders of NCOIL, Troy, N.Y., are preparing to send a letter urging the National Association of Insurance Commissioners, Kansas City, Mo., urging it not to vote on the proposal.
An NAIC working group plans to hold a hearing on the proposal Jan. 27, and the NAIC expects the executive committee and the plenary, the body that includes all voting members of the NAIC, to vote on each of the 9 components of the proposal Jan. 29.
The ACLI, Washington, presented the proposal to the NAIC in November 2008.
The ACLI and other proposal supporters say current rules require life insurers to hold unrealistically conservative levels of capital and surplus. Implementing the 9-point proposal would let insurers make more efficient use of their resources and help to keep them financially healthy and competitive, proposal advocates say.
Opponents say insurers have not offered real proof of the need for changes in capital and surplus rules. Opponents also are criticizing the process the NAIC has used to consider the ACLI proposal.
New York state Sen. James Seward, R-N.Y., NCOIL’s president, says NCOIL’s leaders will “urge the NAIC to slow down until consensus is reached,” because the NCOIL leaders believe a “proper vetting of this issue is needed,” and, “frankly, the timing could not be worse. It leaves the appearance that standards are being relaxed when the rest of the world is calling for more oversight.”
NCOIL leadership has not determined whether it will try to prevent enactment of the proposal in state legislatures if the NAIC votes to adopt the proposal, Seward says.
Kentucky state Rep. Robert Damron, D-Ky., president-elect of NCOIL, says that, if the proposal were adopted, he would consider advancing legislation to prevent the proposal from being used in Kentucky and would advance a proposal to have Kentucky withdraw from NAIC membership. Damron says it is possible that action could be taken to remove references to the NAIC and its models from state law.
Damron says “it takes more guts than a slaughterhouse” for the ACLI to submit the capital and surplus proposal under current conditions.
“Asking regulators to reduce protection to policyholders is just absurd,” Damron says. “If the NAIC does this, as far as I’m concerned, it is absolutely a good case for federal regulation.”
Any member of Congress considering the possibility of federal regulation would have to ask “how the industry could have that much power over regulators,” Damron says. “How can you tell Congress to leave us in charge of insurance when you are getting in bed with the industry? I think [NAIC members] will be handing over insurance regulation to the federal government if they go through with that.”