Given my well-earned skepticism and public criticism of allthings NAIC, I realize I'm probably the last person the NAIC'sleadership would seek out to advise it on its search for a new CEO.And I know full well the value of unsolicited advice (my Dad usedto remind me of that frequently), but I've wasted time on lessentertaining endeavors, so here's my list of priorities for the newNAIC CEO. 

• Reform the place

The NAIC is in need of serious reform. The new CEO (and theregulators themselves) needs to recognize the NAIC is not a club;it is now part of the fabric of state insurance regulation. TheNAIC staff is doing regulatory work. For better or worse, that isthe reality. As a result, the NAIC must adopt new policies oftransparency and accountability. Stop having closed meetings.Develop some system of accountability—what happens if an NAIC staffperson recommends a course of action on a regulatory matter to astate? What recourse does a company have? None today, and this mustchange. I know I get to be a broken record sometimes, but theseorganizational "what-is-the-NAIC and how-does-it-operate" issuesare critical to get right. 

• Adopt a priority-settingprocess

Right now any regulator, department staff person or even NAICstaff person who gets a bee in his or her bonnet about an issue candrive policy for the entire organization. The new CEO needs todevelop a system where issues are identified as problem areas andthen set to work fixing them. Not every regulatory idea is a goodone; in fact, most are bad. All of them cost policyholders money,and there is no system in place to weed out bad ideas before theyget moving. The climate-change fiasco is a great example of this:There was no direction from leadership at the NAIC that this shouldbe a priority; it just became one out of thin air. I could listdozens of issues like this. At the core of this problem seems to bethe belief that more is always better. It's not; it's justmore. 

• Acknowledge the flaws in stateregulation

State regulation of insurance does have its flaws: It's tooredundant and too inefficient. We spend entirely too much time andenergy on price regulation. This is by no means an indictment ofthe state system; it really does fit P&C insurance to have astate-based system of regulation. And it is far betterthan anything that would come from the federal government. But itneeds fixing. The NAIC should be the champion of reform, not thechampion of every idea on the block. The new CEO is in a greatposition to lead efforts to fix the problems of state regulation.In fact, the NAIC could actually make state regulation moreefficient—but today, unfortunately, the association makes it morecostly and dysfunctional. It starts with being honest. To savestate regulation you don't have to defend its flaws andproblems—you have to fix them. The first step in fixing flaws andproblems is acknowledging that they exist.

• Get involved in the issues

One of the great strengths and great differences of outgoing CEOTerri Vaughan was that she got involved in the substance of theissues. This was a big departure from her predecessor, and it madea big difference on some very important issues. Vaughan, of course,has a unique background, and the next leader may not have that sameability, but I believe moving away from this would be a mistake.Sometimes the industry becomes too entrenched (who, me?), sometimes(OK, most of the time) regulators become too entrenched, and athird party is necessary to find common ground. Vaughan did this,and she did it well. The new CEO would be well served tofollow.

Under any circumstances the new CEO will face many challenges,but I truly believe if the NAIC leadership followed at least someof this advice, the organization and, in turn, state regulationwould be better for it.