At the group’s June meeting, the National Association of Insurance Commissioners discussed a proposal to set up a new commission aimed at facilitating regulatory uniformity, National Underwriterlearned recently.
The proposed commission would be put together by the states and authorized by federal law, with the threat of federal preemption for states that don’t enact the uniform standards.
According to a proposal obtained by National Underwriter, the National Insurance Supervisory Commission (NISC) would be formed. Its corporate governance and bylaws would be premised on those established in the Interstate Insurance Product Regulation Commission (IIPRC).
States that are not members of the proposed commission–and fail to take independent action on uniformity standards developed by the commission within a given time period–would be subject to preemption by a federal Office of Insurance Information (OII).
“The relevant law or regulation of the non-compliant state will be preempted by the OII rule,” the proposal states.
The proposal heading notes that this concept was discussed by regulators during the NAIC’s quarterly meeting in June, which was held in Minneapolis.
A statement from NAIC President and New Hampshire Insurance Commissioner Roger Sevigny acknowledged the proposal, and said it is still being developed. “NAIC members work continuously to improve the national system of state-based insurance regulation and further our dual goals of enhanced consumer protection and effective solvency oversight,” he said.
“This proposal is still being formulated and has not been adopted by the membership. The ongoing dialogue among regulators, state government officials and interested parties will continue in the coming months.”
The proposal states that the commission would be formed through an act of Congress, and would develop regulatory standards that would be implemented and enforced by the states. Topics subject to national uniformity would include licensing, some product review, reinsurance and other areas.
Other topics could be added if a super-majority of the commission agreed, the proposal states.
The purpose of the commission, according to the proposal, is “to facilitate uniformity while maintaining and enhancing the consumer protections afforded by the state-based insurance regulatory system.”
The commission would report to and coordinate with the OII to provide the federal government with insurance-related information, report on the development of implementing national uniformity, and provide an international insurance regulatory contact point. The OII, though, would not have a role in the development of standards or operation of the commission.
Responsibilities for the commission would include coordination of members– with the proposal citing state regulators as an example, developing standards and coordinating with federal financial regulators.
Providing some early reaction to the commission workup that’s still in the talking stages, a state legislator, State Rep. Brian Patrick Kennedy, D-R.I., who is also immediate past president of the National Conference of Insurance Legislators, expressed concerns that state lawmakers would relinquish their role over insurance matters if the NAIC proposal is ever adopted.