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March 21, 2012 at 05:23 AM
The National Association of Insurance Commissioners (NAIC) is acknowledging in a letter to a member of Congress that it is not a “regulatory body,” nor a “standard-setter,” but acts to provide a “forum and vehicle” for its members, who are standard-setters.
The NAIC’s lengthy response was at the request of Rep. Ed Royce, R-Calif. Royce, a senior member of the House Financial Services Committee.
Royce, in a letter dated Feb. 28, asked the NAIC to explain the legal reasoning behind its decision to describe itself as a “standard-setting organization” rather than a trade group.
The NAIC response was signed by Kevin McCarty, Florida insurance commissioner and NAIC president.
It was obtained by the National Underwriter last night.
Specifically, McCarty said, “The NAIC does provide a forum for members to establish regulatory policy, standards, and best practices. However, the decision to implement such standards remains with the individual states.”
At the same time, McCarty voiced indignation that critics, including those at trade groups, style it a “trade group.”
He acknowledged that the NAIC is registered with the Internal Revenue Service as a non-profit.
But, he said, “The NAIC is not a trade association and you are correct that members of the NAIC object to its characterization as such.”
McCarty said a “trade association is made up of businesses or business people in a common field and is designed to assist its members and its industry in dealing with mutual business problems.”
By contrast, he said, “The NAIC is an association of elected and appointed state regulatory officials charged with regulating the insurance industry under state law.”
