Hundreds of state insurance commissioners, aides, lobbyists and consumer group representatives have gathered in San Francisco this week for the fall national meeting of the National Association of Insurance Commissioners.
The agenda for the NAIC’s life insurance, annuity and health insurance seems lighter than usual, with a lot more focus on approving consumer guides and discussing long-running products than on approving major new models.
One reason may be that commissioners knew going into the meeting that conditions were changing.
Traditionally, the United States has left regulation of the business of insurance to the states. The NAIC is a Kansas City, Missouri-based group for insurance regulators, not a government agency. It cannot normally change state insurance laws, regulations or procedures directly. But states often use NAIC models when developing their own laws and regulations, and, in many cases, they adopt some types of NAIC changes, such as changes to financial reporting forms, automatically.
Here are five external factors hanging over the NAIC this week.
1. Camp Fire
San Francisco is just 180 miles away from California’s devastating Camp Fire, in Butte County, California. The fire has killed 56 people, caused the evacuation of 52,000 people and destroyed about 9,000 structures, and the fire is still just 40% contained, according to the California Department of Forestry and Fire Protection.
The smoke and soot from the fire have caused the official air quality index to rise to 235, which is three times the typical index level in Beijing and is classified as “very unhealthy.”
The NAIC itself issued a travel advisory to would-be meeting attendees.
“As attendees travel to San Francisco for the National Meeting, the NAIC advises the Bay Area is impacted by smoke from the Butte County fire,” the NAIC said in the advisory. “Please check resources below for air quality status and health advisories. All travelers should check with airlines for delays.”
Whatever attendees are saying in official proceedings about life insurance, annuities and health insurance, their minds may well be on the need to prevent and cope with catastrophic natural disasters.
2. State Elections
The Nov. 6 general elections gave Democrats control over the U.S. House.
The elections also had a big effect on the balance of power at the state level.
Before the election, Republicans controlled the state House, the state Senate and the governorship in 26 states.Democrats had complete control in seven states. Control was split in a bipartisan way in 17 states.
Three of the top four NAIC offices — the presidency, the vice presidency and the president-elect post — were held by states with complete Republican control.
Ballots are still being counted in some states, but it appears that Republicans now have complete control in 21 states, Democrats have complete control in 14 states, and the parties split control in 13 states.
Increasing Democratic clout at the state level could change how the NAIC approaches insurance issues.
3. California’s Elections
California — which, if it were a separate country, would have an economy ranked as the fifth biggest in the world — has an elected commissioner.
At press time, California still had to process 2.8 million of its 11.1 million ballots.
But Ricardo Lara, a Democrat, is leading Steve Poizner, a former California insurance commissioner who is running as an independent, by a 51.5% to 48.5% margin.
Dave Jones, the current commissioner, is a Democrat who has taken strongly pro-consumer positions.
While serving as a state senator, Lara co-introduced a single-payer health care bill that could have prohibited the sale of private health insurance.
4. Maine’s Elections
Eric Cioppa, the NAIC’s president-elect, was appointed to his point as the Maine insurance superintendent by a Republican governor, Paul LePage.
LePage will be leaving office because of term limits.
Maine voters have elected Janet Mills, a Democrat, to be their next governor.
Before, Democrats controlled the Maine state House, but Republicans controlled the Maine state Senate. Now, Democrats control both the Maine House and the Maine Senate as well as the governorship.
Cioppa has been a low-key, methodical regulator, and Mills may keep Cioppa as insurance superintendent, but the election has shaken things up.
5. The National Council of Insurance Legislators (NCOIL)
NCOIL will be starting its own annual meeting in Oklahoma City Dec. 5, and it has posted an agenda with a strong states’ rights edge, and many proposals aimed at strengthening state legislators’ role in insurance regulation.
The authors of one draft resolution NCOIL note, for example, that the NAIC uses its state insurance regulator accreditation program to collect fee revenue from states.
In the real world, “state insurance commissioners act at NAIC in large part operating under a delegation of authority from the states’ legislative branch, but without oversight of state legislators,” according to the draft resolution, which is sponsored by Assemblymember Ken Cooley of California.
The draft resolution calls for each state insurance department to brief state legislators on NAIC activities every other year, and for each department to provide briefing travel money for top state legislators, and for the leaders of state House and state Senate insurance committees, so that the state legislators can afford to attend the briefings.
— Read Key State General Election Results, for Agents, on ThinkAdvisor.