Support State Reg., Pickens Urges NCCI

Support State Reg., Pickens Urges NCCI

By Daniel Hays

NU Online News Service, May 16, 11:05 a.m. EDT, Orlando, Fla.?The president of the National Association of Insurance Commissioners warned yesterday that if the federal government were to regulate insurance the industry would face a remote, politicized, unresponsive system.

"When you're a consumer and you call 911 with a problem, you want that to be a local call," Mike Pickens told the annual symposium of the National Council on Compensation Insurance here.

Mr. Pickens' plea for the group to support continued state regulation over proposals for federal control may have gained some urgency after an interactive poll of the audience, taken before he spoke, showed support for state regulation had lost a few points.

Asked what form of regulation they favored for insurance, 51 percent said state, 27 percent voted for federal and 22 percent favored some combination of the two.

Last year the numbers were 62 percent for state, 14 percent for federal and 24 percent for a combination of the two.

A federal regulator would not be nearly as accountable as a state regulator, said Mr. Pickens, who is the Arkansas insurance commissioner. He also warned that a federal regulator would be "highly politicized."

When a state regulator makes a decision that is adverse to the industry, under the current framework, insurers have 49 other states where they don't have to deal with that situation, which would not be the case with a federal regulator's ruling, he pointed out.

Mr. Pickens mentioned that even if federal regulation went into effect, state laws would remain?a federal layer "would be piled on top."

Additionally, he predicted that federal and state regulators would be "trying to outdo one another."

He said, from visits to Washington, that his sense is that Congress has come to realize from the debate over passage of the Terrorism Risk Insurance Act that insurance can be a highly charged political issue.

Rather than federal regulation, he said, he believes they are now leaning more toward laws which would require states to institute certain reforms by a certain date, or see a federal regulation put in place, as was the case with licensing requirements in the Gramm-Leach-Bliley Law.

Mr. Pickens said all of the state regulators have realized that state regulations have to be less costly and less burdensome, and he drew applause when he said it was "unacceptable" for any state to take 30 days to review an insurance product proposal. "Every commissioner believes it's unacceptable," he said.

Mr. Pickens noted a variety of steps that state commissioners have taken to improve their operations. He pointed to the System Electronic Rate Form Filing, an automated process for filing of all lines now accepted by Arkansas.

In answer to a question from the audience, Mr. Pickens said that the NAIC has not taken a position on whether the Terrorism Risk Insurance Act should be continued past its sunset date of 2005, but his personal opinion is "we do need to extend."

He said that "terrorism is not a risk an insurer should have to bear?this is a war risk." He added that the risk should be borne by taxpayers.