Editor's Note: The National Association of InsuranceCommissioners announced in August that Terri Vaughan was steppingdown as CEO. The group is conducting a search for asuccessor. 

Given my skepticism and well-known public criticism of allthings NAIC, I realize I'm probably the last person the group'sleadership would seek out to advise it on its search for a new CEO.And I know full well the value of unsolicited advice (my Dad usedto remind me of that frequently), but I've wasted time on lessentertaining endeavors—so here's my list of priorities for the newNAIC CEO. 

Reform the place

The NAIC is in need of serious reform. The new CEO (and theregulators themselves) needs to recognize the NAIC is not a club;it is now part of the fabric of state insurance regulation. TheNAIC staff is doing regulatory work. For better or worse, that isthe reality. As a result, it must adopt new policies oftransparency and accountability. Stop having closed meetings.Develop some system of accountability—what happens if an NAICstaffer recommends a course of action on a regulatory matter to astate? What recourse does a company have? None today. This mustchange. 

Adopt a priority-setting process

Right now any regulator, department staff person or even NAICstaff person who gets a bee in his or her bonnet about an issue candrive policy for the entire organization. The new CEO needs todevelop a system where issues are identified as problem areas andthen set to work fixing them. Not every regulatory idea is a goodone; in fact, most are bad. All of them cost policyholders money,and there is no system in place to weed out bad ideas before theygain momentum. The climate-change fiasco is a great example ofthis: There was no direction from leadership at the NAIC that thisshould be a priority; it just became one out of thinair. 

Acknowledge the flaws in state regulation

State regulation of insurance does have its flaws: It's tooredundant and too inefficient. We spend entirely too much time andenergy on price regulation. This is by no means an indictment ofthe state system; it really does fit P&C insurance to have astate-based system of regulation. And it is far better thananything that would come from the federal government. But it needsfixing. 

The NAIC should be the champion of reform, not the champion ofevery idea on the block. The new CEO is in a great position to leadefforts to fix the problems of state regulation. In fact, the NAICcould actually make state regulation more efficient—but today,unfortunately, the association makes it more costly anddysfunctional. It starts with being honest. To save stateregulation you don't have to defend its flaws and problems—you haveto fix them. The first step in fixing flaws and problems isacknowledging that they exist.

Get involved in the issues

One of the great strengths and great differences of outgoing CEOTerri Vaughan was that she got involved in the substance of theissues. Vaughan, of course, has a unique background, and the nextleader may not have that same ability—but I believe moving awayfrom this would be a mistake. Sometimes the industry becomes tooentrenched, often regulators become too entrenched, and a thirdparty is necessary to find common ground.

I truly believe if the NAIC leadership followed at least some ofthis advice, the organization and, in turn, state regulation wouldbe better for it.