NU Online News Service, April 3, 3:52 p.m.EDT

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Actions being taken today by state insurance regulators willdeal with current inefficiencies and create a more effective,state-based regulatory system, the chief executive officer of theNational Association of Insurance Commissioners said.

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NAIC CEO Therese M. Vaughan's comments came in a video interviewwith Leonard C. Brevik, National Association of ProfessionalInsurance Agents executive vice president and CEO.

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The interview was played during NAPIA's recent federallegislative summit and transcribed portions of the interview weremade available by the PIA.

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Ms. Vaughan said the current system protects consumers, andwhile not perfect, "we are there on the ground to deal withconsumers. There's a lot of talk right now about global financialstability. We are there worrying about the family's financialstability, the promises companies have made and whether consumersare going to benefit from those promises."

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The current system, she went on to say, is not state-based, buta "national state-based system."

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"There is a tremendous amount of coordination that goes on," shecontinued.

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"We have built a structure over the last 20 years or so that hasa tremendous amount of interaction between the states. It's got alot of peer review. It's got a lot of states advising other states.It has standards in areas that we all adhere to, [such as] uniformprocesses, centralized databases, centralized review processes,oversight of activities that are going on all over," said Ms.Vaughan.

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The coordination that goes on today among insurance regulatorsbenefits consumers and gives regulators the checks and balancesthey need to pick up problems, she advised.

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Further, she said, the current system allows for the protectionof consumers, and "at the same time that we have this overlay ofworking together to identify problems and solve problems…it helpsus correct errors before they get to be too big."

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She admitted that improvements still need to be made to thecurrent system.

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"It's a good system, but can we make it better," she said. "Thisis an opportunity to look at ways to make the state-based systemfunction more as a highly coordinated national system," shesaid.

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"I think if we look three-to-five years from now, we will seesome changes in the relationship among the states, and I go back tothe Interstate Compact … I think that's an example of the kind ofthing that can be done to make this a more effective nationalsystem and deal with some of the inefficiencies we have."

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Ms. Vaughan also mentioned that the NAIC is forming a Center forInsurance Policy and Research for policymakers in Washington, D.C.,to access the NAIC and its insurance information more easily.

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Congress is looking for solutions and "is tired of hearingpeople say they want an optional federal charter, [and] they'retired of hearing supporters of state-based systems say 'don't doanything, the system is fine just the way it is."

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Ms. Vaughn said the NAIC will be seeking a professor onsabbatical to fill the NAIC academic position of DistinguishedScholar in Insurance Regulation. The professor will spend a year inthe world of insurance regulation and "help us think through thedifficult problems," she explained.

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