A demand by state lawmakers for the National Association of Insurance Commissioners to open their locked-door executive sessions has been joined by consumer advocates and insurers.

The call for regulators to open up sessions came at the recently concluded NAIC session in San Francisco during a discussion of the organization's development of a new procedure for enacting model laws.

It came in the wake of an NAIC executive session that was attended by two state legislators–one of whom found his way blocked by a security guard who saw his name on a “do not admit list.”

The two lawmakers–Rhode Island State Rep. Brian Kennedy, D-Hopkinton, who is vice president and president-elect of the National Conference of Insurance Legislators; and Kentucky State Rep. Robert Damron, D-Jessamine, NCOIL's treasurer–have been demanding that more NAIC sessions be open.

Criticism by consumer advocates and insurer representatives of the closed sessions was sparked by an NAIC move toward a procedural change that will result in some proposed model laws that fail to pass being designated as “guidelines.”

Birny Birnbaum, consumer representative from Austin, Texas, said the NAIC's executive session development of a “fundamental” change to its model law process illustrated a failure to involve its stakeholders.

He asked why the meetings that led up to the announcement were done in closed executive sessions. He also called on the NAIC to hold a public hearing on the issue and, based on the feedback offered during that hearing, make a decision on whether to proceed with the change to the model law policy.

The new policy may have merit, but because stakeholders did not have the opportunity to listen to discussions about why it should be implemented, there is no way to determine this, he added.

In response, NAIC President-elect Sandy Praeger said that “change is difficult, and we all recognize that it is natural to have some resistance.”

However, the Kansas insurance commissioner added, rather than spend two years developing a model, it is better to look at it upfront. “We don't have the luxury of spinning our wheels on a model that doesn't go forward,” she said.

David Snyder, a representative for the American Insurance Association, said public input on the model change would be appropriate. He asked about the legal significance of regulatory guidelines for proposals that do not have model status but are recommended as a best practice.

In response, Ms. Praeger noted that model laws do not become law until a state enacts them. The time devoted to determining whether work should be a model will provide opportunity for dialogue, she said.

California Insurance Commissioner Steven Poizner said priorities will be important going forward because state regulators have challenges to meet.

Among other points, he said, the state regulatory system has been criticized for being cumbersome as a decision-making process and slow to respond in a global economy.

However, he continued, if one considers the aftermath of Hurricane Katrina, it becomes “crystal clear” that states and not the federal government were protecting consumers.

(Jim Connolly is a senior editor covering regulation for NU's life and health insurance edition.)

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Pressure Builds For Open NAIC Meetings

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