NU Online News Service, Dec. 23, 10:35 p.m.EST

The officers of the National Conference of Insurance Legislatorssaid a National Association of Insurance Commissioners coordinationproposal would weaken state authority.

"We have grave and fundamental concerns with the substance,process, and politics of this proposal," the officers of NCOIL,Troy, N.Y., wrote in a letter to the officers of the NAIC, KansasCity, Mo.

The NAIC developed the National Insurance Supervisory Commissionproposal in response to complaints from insurers and others aboutvariations in state insurance regulatory requirements and whatcritics say are delays in getting states to adopt and implementgenerally accepted rules and rule changes.

A NISC discussion draft calls for states to join NISCvoluntarily. Once states joined NISC, NISC would oversee insuranceregulation "without further state legislative action" in areas suchas life insurance, producer licensing and company licensing,according to an NCOIL summary of the draft.

NISC would help the states work with the federal insuranceoffice that Congress has proposed creating.

The NAIC asked NCOIL for comments on the NISC proposal.

The NISC proposal would take authority away from the states anderode the division of powers between the federal government andstate governments, the NCOIL officials write in their letter.

"We see little, if any, role for legislators and other stateofficials who have partnered with you over these many years toensure the health and welfare of consumers and insurance businessesin the states," the NCOIL officials said. "Your willingness to turnyour back on the state-based system and join with the federalgovernment to secure a seat at the proverbial table isalarming."

NCOIL expects any federal government involvement in insuranceregulation to lead to more involvement, the NCOIL officialswrite.

"In order to move forward toward appropriate reform, werecommend that first, you withdraw your support for a federaloffice of insurance and second, that we start from the beginning ata summit of state officials to be held at your earliest convenienceat the Council of State Governments … –an organization which servesall three branches of state government, including legislators,governors, and attorneys general," the NCOIL officials said."Fortunately, CSG is also the home of the National Center forInterstate Compacts, a facility that has a long history of helpingstates modernize cooperatively."

A copy of the letter is available at: http://www.ncoil.org/HomePage/2009/12212009NISCLetter.pdf

Allison Bell is a senior editor with NU's Life & HealthInsurance edition.