NCOIL Pans NAIC National Commission Proposal

NU Online News Service, Dec. 23, 10:35 p.m. EST

The officers of the National Conference of Insurance Legislators said a National Association of Insurance Commissioners coordination proposal would weaken state authority.

"We have grave and fundamental concerns with the substance, process, and politics of this proposal," the officers of NCOIL, Troy, N.Y., wrote in a letter to the officers of the NAIC, Kansas City, Mo.

The NAIC developed the National Insurance Supervisory Commission proposal in response to complaints from insurers and others about variations in state insurance regulatory requirements and what critics say are delays in getting states to adopt and implement generally accepted rules and rule changes.

A NISC discussion draft calls for states to join NISC voluntarily. Once states joined NISC, NISC would oversee insurance regulation "without further state legislative action" in areas such as life insurance, producer licensing and company licensing, according to an NCOIL summary of the draft.

NISC would help the states work with the federal insurance office that Congress has proposed creating.

The NAIC asked NCOIL for comments on the NISC proposal.

The NISC proposal would take authority away from the states and erode the division of powers between the federal government and state governments, the NCOIL officials write in their letter.

"We see little, if any, role for legislators and other state officials who have partnered with you over these many years to ensure the health and welfare of consumers and insurance businesses in the states," the NCOIL officials said. "Your willingness to turn your back on the state-based system and join with the federal government to secure a seat at the proverbial table is alarming."

NCOIL expects any federal government involvement in insurance regulation to lead to more involvement, the NCOIL officials write.

"In order to move forward toward appropriate reform, we recommend that first, you withdraw your support for a federal office of insurance and second, that we start from the beginning at a summit of state officials to be held at your earliest convenience at the Council of State Governments ... --an organization which serves all three branches of state government, including legislators, governors, and attorneys general," the NCOIL officials said. "Fortunately, CSG is also the home of the National Center for Interstate Compacts, a facility that has a long history of helping states modernize cooperatively."

A copy of the letter is available at: http://www.ncoil.org/HomePage/2009/12212009NISCLetter.pdf

Allison Bell is a senior editor with NU's Life & Health Insurance edition.

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