Oxley: NAIC's 'Hands Tied' On Reform
Washington
Despite its best efforts, the National Association of Insurance Commissioners may not be able to achieve the regulatory reforms the insurance industry needs, the chairman of the House Financial Services Committee contends.
"I am not here to blame the NAIC for a lack of reforms," Rep. Mike Oxley, R-Ohio, said during a hearing last week on regulatory reform. "To a large degree, their hands are tied."
While the Kansas City, Mo.-based NAIC can approve initiative after initiative, Rep. Oxley said, state legislatures must act on them. "Unfortunately, it is becoming increasingly apparent that the NAIC may be facing an insurmountable task," he added.
While he hopes that the NAIC and state legislators will be able to achieve reform, Rep. Oxley said his committee will not sit idly by. "We will keep building on our reform efforts and we will not let up until consumers receive the most effective and competitive marketplace that can be created," he said.
Rep. Paul Kanjorski, D-Pa., the Ranking Democrat on the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, agreed. "No matter what side one takes in this longstanding debate, it has become clear to me that this is no longer a question of whether we should reform insurance regulation in the United States. Instead, it has become a question of how we should reform insurance regulation," he said.
Subcommittee Chairman Richard H. Baker, R-La., said that while it is not possible to resolve the issue in the short term, he will continue to pursue the effort. "This will not be the last hearing," he said. Indeed, he added, he expects to convene a roundtable discussion among subcommittee members over the next few months to identify areas of agreement and disagreement.
During the hearing, Rep. Baker asked Iowa Insurance Commissioner Terri Vaughan, who is president of the NAIC, how quickly an interstate compact that embodies regulatory reform could be achieved. Ms. Vaughan said she could not give a specific time frame.
She said that 46 states were able to achieve agent and broker licensing reciprocity within two-and-a-half years of Congress calling for reform as part of the Gramm-Leach-Bliley Act. (GLB contained a provision calling for a National Association of Registered Agents and Brokers to come into being if a sufficient number of states failed to enact licensing reform within three years.)
However, Ms. Vaughan cautioned, she is not saying that an interstate compact could be achieved in the same time frame. The key, she said, is the participation of state legislatures. The NAIC, she said, is working closely with state legislative groups on the effort, which she believes can be put into place.
Asked by Rep. Kanjorski what would be the worst disadvantage of federal regulation, Ms. Vaughan said it would be the inability of regulators in her state of Iowa, for example, to address local market issues. She noted that Iowa has a relatively large population of senior citizens, and that the Iowa Insurance Department focuses a lot of attention on their needs. She questioned whether a federal regulator would be as sensitive to those needs.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, June 24, 2002. Copyright 2002 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.