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Changing of the Guard

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Dr. Theresa “Terri” Vaughan has announced her retirement today, effective in February, as chief executive officer of the National Association of Insurance Commissioners.

Diane Koken, Pennsylvania’s longest-serving insurance commissioner before stepping down in 2007, is expected to be named to succeed her.

Vaughan would be stepping down after completing her four-year term as the first NAIC CEO.

According to multiple industry and regulatory sources, the changing of the guard is expected to be announced at the plenary session that will mark the end of the NAIC summer meeting, being held in Atlanta.

NAIC spokespeople were not immediately available for comment.

Ironically, Koken’s appointment may occur in the same week as the Treasury Department could unveil its long-delayed report on how state insurance regulation should be reformed and modernized.

Multiple sources have told National Underwriter that they anticipate the Treasury Department will unveil the long-awaited report this week. The report was mandated by the Dodd-Frank financial (DFA) services reform law, and was supposed to be released in January.

Michael McRaith, director of the Federal Insurance Office that is mandated by the DFA to prepare the report, gave hints as to what the report might cover at the Aug. 6 meeting of the Federal Advisory Committee on Insurance. McRaith created the FACI to gain input from industry and regulatory officials on insurance issues.

McRaith said the report would like likely view U.S. insurance regulation through the wide-angle lens of internationalization, and also seek input on the shortcomings of, and the need for updating, state insurance regulation. 

Ms. Koken was the face of the NAIC as president in 2005 when Reps. Mike Oxley, R-Ohio, chairman, and Richard Baker, R- La., the chairman and head of the key Capital Markets Subcommittee of the House Financial Services Committee, proposed legislation dealing with these same issues.

The bill was called the State Modernization and Regulatory Transparency Act. A number of hearings were held on the legislation, and there was much debate both inside and outside of Congress on the bill. The bill was never formally introduced, and died when Democrats took control of the Congress in late 2006. Both Oxley and Baker left Congress before the Obama administration took control in 2009.

Vaughan headed the NAIC during a period when the insurance industry endured the fallout from the mortgage housing bubble in general and the takeover of the nearly-insolvent American International Group.

The crisis led to the passage of two landmark pieces of legislation, the-DFA and the Patient Protection and Affordable Care Act, both passed by Congress in 2010.

Both call for a strong federal voice in oversight of insurance activities. States have dominated insurance regulation since the country was formed, and this role was made specific in two prior pieces of legislation, the McCarran-Ferguson Act of 1945, and the Gramm-Leach-Bliley Act of 1999.

Vaughan split her time running the NAIC between the Washington and Kansas City offices.

She also travels overseas extensively as part of her NAIC work.

She served under both Republican and Democratic administrations as the longest-serving insurance commissioner in Iowa’s history. She also served as NAIC president in 2002.


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