WASHINGTON--State insurance regulators have voted to keepconfidential insurers' pending applications for new products priorto their approval.

The action at a meeting of the National Association of InsuranceCommissioners applies to product filings that are pending approvalwith the Interstate Insurance Product Regulation Commission.

Prior to the vote insurers warned that amending the currentpublic access policy would make them less likely to use thecommission. But a leading consumer advocate called that argument "asham." The Compact Commission is currently trying to increase thenumber of product filings so the commission will become profitableand self-sustaining.

To date, 117 product filings have been approved in an average of25 states with an average turnaround of 31 days, according toFrances Arricale, the commission's executive director.

Company after company--including Aegon, Genworth Financial, JohnHancock, Mass Mutual, New York Life, Prudential and UNUM--said theywould be wary of using a system that would reveal new, innovativeproducts to competitors. These companies said that they have eitherused the commission to file products or planned to use it in thenear future or when more standards are developed.

However, these companies "need to protect intellectualproperty," according to Michael Lovendusky, representing theAmerican Council of Life Insurers, Washington. Mr. Lovendusky wasjoined by Randi Reichel, representing America's Health InsurancePlans, Washington, in opposition to the amendment.

Birny Birnbaum, a consumer representative who receives NAICfunding to attend its sessions, cited the current financial crisiswith American International Group, New York, and Wall Street ingeneral, as a reason for greater transparency.

"The meltdown was due in a large part to the need for greatertransparency and greater accountability," he said. Mr. Birnbaumsaid he was joined by the Center for Insurance Research and theConsumer Federation of America.

Mr. Birnbaum told commissioners that insurers are in effectsaying that if state regulators do not do what they want, they willstay away from the commission and "state regulators will look ineptto Congress."

But he continued, "Where will this stop?" Will insurers threatento not use the commission if there is another rule that they don'tlike that is put into effect?" he asked.

"Some of these people are using the AIG crisis to say that thereshould be federal oversight. Why would you count on the words thesefolks say when at the same time they are doing their best toundermine state based regulation?"

The NAIC has criticized the ACLI and the American InsuranceAssociation, Washington, for releasing statements saying that theAIG crisis demonstrates the need for a federal regulatorypresence.

Mr. Birnbaum noted that in many states, product filings becomepublic when they are filed.

A recent IIPRC survey taken between July 16 and Sept. 2 foundthat 44 percent of respondents had access to pending filings andthat 68 percent of states surveyed had access to disapprovedfilings and 59 percent to withdrawn filings which include access toaccompanying correspondence and other records.

He also cited comments from North Carolina InsuranceCommissioner Jim Long that the commission affords trade secretprotections to companies when needed.

And, Mr. Birnbaum said, in states that do make product filingspublic, companies' filings are open to everyone, includingcompetitors, and it has not made a major difference in themarket.

Maryland State Sen. Delores Kelley, D-Baltimore, a legislativerepresentative to the NAIC, said the focus should really be ondeveloping strong product standards that will create a strongproduct filing system that will be witness to the strength of stateregulation. "The feds should have been regulating. State regulatorsare doing their jobs. There are no short sales and no creditswaps."

Various states who had immediate public access to filings inplace in their states said that rarely did consumers ask to seethese filings and that usually requests were made bycompetitors.

Separately, it was agreed that at least for the time being, aflat fee for product filings would not be used because it was toodifficult to determine components in a flat fee. The reason,according to Ms. Arricale, is because different filings haddifferent numbers of states in which the filings were made, anddifferent states have different fees. Fees can range from $20 to$6,000, she noted.