ACLI Losing CredibilityIn State Regulatory Debate
The protestations by the American Council of Life Insurers that, yes, it does indeed still support state regulation of insurance are becoming harder to believe by the week.
First, it was the ACLI's pioneering federal chartering option proposal that took a huge bite out of the group's credibility on the issue. Granted, ACLI's board only voted to study the proposal, not to officially endorse federal chartering. But does anyone really doubt where the organization's thoughts are heading?
The latest blow to ACLI's support of state regulation came in recent testimony before Congress that ACLI now sees improving the efficiency of state regulation as a "survival issue." ACLI gave a major new initiative by the National Association of Insurance Commissioners some perfunctory lip service before it launched full-bore into the still-new CARFRA program's flaws.
We find this unfortunate not simply because the Coordinated Advertising, Rate and Form Review Authority (CARFRA) is one of our favorite new acronyms. The more important reason is that CARFRA's first test case–a product filing by Prudential Financial–was launched almost simultaneously with ACLI's broadside on the Hill.
No one is under the illusion that getting the states to work in unison is going to be easy. They are jealous of their regulatory prerogatives. The main way this is manifesting itself in CARFRA is through regulatory deviations among the states that force companies to alter their product filings, despite the single point of filing.
Still, we prefer the constructive criticism offered by the Independent Insurance Agents of America, the National Association of Professional Insurance Agents, and the National Association of Insurance and Financial Advisors. In written testimony to Congress, the agent groups noted that unless state deviations in CARFRA are eliminated, the number of deviations will rise exponentially as more states and products are added, thus defeating the purpose of the initiative.
To solve the problem of speed-to-market, the agents say, each state must take steps to eliminate unnecessary requirements, respond to approval requests more quickly, develop uniform standards for filing and review, and establish a more transparent review process.
It may surprise ACLI to know that regulators themselves are aware of flaws in CARFRA as it is now set up. Indeed, moves are already afoot to study and remedy some of these.
ACLI's testimony in Congress was no doubt intended to put more pressure on the NAIC in front of a body that is already somewhat skeptical about the efficacy of state regulation.
ACLI undoubtedly feels justified in these tactics because it has some strong arguments on its side–product filings do take too long and put insurers at a competitive disadvantage.
We would be the first to agree that the organization has every right to defend the interests of its members. What we would like to see, however, is a more nuanced approach.
We thought the pounding ACLI took from many quarters over simply floating its federal chartering proposal was unjustified. Similarly, we think it was poor form of ACLI to attack CARFRA before it even had a chance to get through its pilot product filing.
We prefer the constructive
criticism offered by three
leading agent associations
on how states can perfect
their speed-to-market plan
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 20, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.