State legislators angrily warned state insurance regulators not to cut a deal with Congress to make regulators the defacto federal regulator through either the National Insurance Supervisory Commission or any other mechanism embedded in Congressional bills.
State insurance commissioners responded that the proposal was just that: a proposal that was up for discussion, one option among many.
During the winter meeting of the National Association of Insurance Commissioners, Kansas City, Mo., here, state Rep. Brian Kennedy, D-Hopkinton, R.I., warned during a forum that if regulators tried to embed legislation to remove legislators’ authority to create law for insurance, he would seek a resolution at the meeting of the National Conference of State Legislatures, Washington, next week to oppose the proposal and to have legislatures prevent state insurance department’s participation in any such program.
Kennedy also asked how the NAIC proposed to get a new compact enacted when some states had still not enacted the Interstate Insurance Product Regulation Commission, Washington.
State Rep. Bob Damron, D-Nicholasville, Ky., and president of the National Conference of Insurance Legislators, Troy, N.Y., started his remarks by stating that if “the NAIC would just oppose federal regulation, we wouldn’t be here today.” He cautioned that “if this appears in a federal bill, you’re going to have trouble. Legislatures will totally rebel.”
In an earlier dialogue between state legislators and regulators, Damron had said that it was unwise to start offering such options before federal regulation is seriously considered because it diminishes the bargaining power of states. “We do not need to be responsive to the federal government. Our response should be that you failed at most everything. This is a consumer issue.”
Roger Sevigny, New Hampshire commissioner and NAIC president, emphasized that this is only a proposal and there was no attempt to cut out state legislators from efforts to maintain state control of insurance regulation. In fact, he maintained, both regulators and legislators wanted the same thing.
In the earlier dialogue, Illinois Director Michael McRaith noted that there are state legislators who agree with what the NAIC is trying to do and suggested that while “there is value in rhetoric, what is really more important is constructive engagement.”
Jane Cline, West Virginia insurance commissioner and NAIC President Elect, emphasized that the NAIC is “looking at ways to be responsive while still protecting state-based regulation. There is no determination where this will be housed, how it will look or what the involvement of state regulators or state legislators will be.”
Birny Birnbaum of the Center for Economic Justice, Austin, Texas, said that the IIPRC has had a lack of consumer participation and “instead of higher standards, it has been just the opposite even when individual states have had higher standards.” Any such commission would need a more formalized consumer advisory committee, he added.
Trade groups also weighed in on the issue.
There is a lot of need for uniformity and reciprocity across the country, said David Eppstein of PIA National, Alexandria, Va. “But, frankly, we are nervous about turning to the federal government. You don’t know what you are going to get when you turn to the federal government. This could grow into something that you didn’t intend it to be.”
Deirdre Manna of the Property Casualty Insurers Association of America, Des Plaines, Ill., said that PCI was supportive of modernization and uniform regulation that would “ensure the least, lightest touch of federal regulation of the property-casualty industry.”
Manna cited concerns over duplication of regulation and that NISC would concentrate too much power and offer too little oversight.
Uniformity is important to producers, said Ron Panneton of the National Association of Insurance and Financial Advisors, Falls Church, Va. He also suggested that regulators reach out and create a stronger relationship with state legislators.