The National Association of Insurance Commissioners came under fire from a leading consumer advocate for not asking consumer representatives to participate in a meeting to discuss the future role of states in insurance regulation.

“We are struck by the absence of any consumer organizations in the list of participants” at a roundtable held to discuss how state insurance regulation can be improved, Birny Birnbaum, executive director for the Center for Economic Justice in Austin, Texas, said in a letter to NAIC President Sandy Praeger.

“Given that the NAIC's mantra is that state insurance regulation is all about protecting consumers, we ask if you could explain why no consumer representatives were invited to the meeting and how the NAIC could reasonably get feedback about the prospects of an [optional federal charter] or the future of insurance regulation without the views of the consumers who would be affected by such legislation,” he added.

The NAIC, as reported exclusively in last week's edition of National Underwriter, invited representatives of four industry trade groups, as well as three congressional leaders (all Democrats) to hear their views on how state regulation can be improved.

It came against the background of a Treasury report released in late March that called for a greater federal role in insurance regulation as part of a broader modernization of financial services oversight, as well as legislation introduced in both the House and Senate that would create an optional federal charter.

In addition, legislation was introduced in the House on April 14 that would implement the Treasury report's call for an Office of Insurance Information within the Treasury Department as a potential first step toward legislation creating an OFC.

The May 21-22 meeting was listed on the NAIC Web site as an “educational” gathering for commissioners. A picture of Sen. Ben Nelson, D-Neb., a former insurance commissioner, addressing the group of commissioners and staff from 42 states, appeared on the NAIC Web site. However, no information as to what was talked about was provided.

In a message to its members, the Council of Insurance Agents and Brokers said the day-and-a-half session with commissioners was called to ponder their response to the “interesting developments this year over the extent to which the feds should preempt state authority” over insurance.

Those presiding, according to the CIAB note to members, were Kansas Commissioner Praeger, and last year's NAIC president, Alabama Commissioner Walter Bell.

The NAIC declined to comment on the letter from Mr. Birnbaum.

In the letter, Mr. Birnbaum added that he agreed with comments by David Sampson, president and chief executive officer of the Property Casualty Insurers Association of America, in an interview with NU following his appearance at the roundtable, in which he said state regulation must be modernized.

“However, we are certain that we disagree about what that means,” Mr. Birnbaum said. “For industry, modernization means deregulation and an opaque market and regulatory system in which virtually all industry information is nonpublic.”

For consumer advocates, according to Mr. Birnbaum, modernization means state regulators are “better able to identify and stop market problems before the problems harm consumers; a vibrant data collection and market analysis system; and a more transparent and accountable regulatory structure in which regulators do not routinely jump to jobs with the very entities they once regulated.”

Special Reports /

Consumer Advocate Hits NAIC Over Exclusion From D.C. Meeting

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