NAIC: ?Regulatory Lawsuits' Undermine Us

NAIC: ?Regulatory Lawsuits' Undermine Us

NU Online News Service, Dec. 10, 2:50 p.m. EST?Regulators at the National Association of Insurance Commissioners meeting in California said they are still searching for ways to deal with what they call "Regulatory Lawsuits" that undermine state-level regulatory authorities.[@@]

In these multistate class action lawsuits, regulators said, case laws made by juries and judges from one state can create far-reaching new insurance rules, hurting the authority of state insurance regulators and legislatures and their existing rules.

Participants at the class action insurance litigation working group, at the NAIC winter meeting in Anaheim, also warned that problems posed by such suits are getting worse.

"The thing that remains very clear is that these lawsuits, what regulators are now calling?and I think it's a good name??regulatory lawsuits,' really affect the authority of regulators to do their job," said Peter Bisbecos, director of legal and regulatory affairs at the Indianapolis-based National Association of Mutual Insurance Companies.

Mr. Bisbecos, one of the participants at the NAIC class action insurance litigation working group, said this is a significant and growing problem for regulators and insurers alike.

"From the insurer's perspective also, this is an extremely serious problem," he said. "From a company's perspective, you file your forms and you file your rates?you rely on those things?and if a court in a different state strikes them down without any notice to anybody, there is no longer the stability of rules that insurers can rely on. That's huge, especially in a regulated industry." Mr. Bisbecos also added this is a concern that regulators also clearly understand.

But, at the moment, there are no sure-fire ways to tackle this dilemma. "Regulars are beginning to discuss possible things they can do," Mr. Bisbecos said. One thing they are waiting for, he observed, is an upcoming study from Santa Monica, Calif.-based RAND Corporation's Institute of Civil Justice, which will closely examine class action lawsuits' frequency and outcomes. "The RAND is currently doing a study on this. That study is going to be big news when it comes out," he said.

In the meantime, regulators are starting to look at other possible things they should do. "There are a couple of things they are now trying," Mr. Bisbecos said. "They are trying to file more amicus briefs or intervene as defendants or plaintiffs in these class action lawsuits, to defend their authority." Both these measures can be very effective, he argued, if the court lets them in and pays attention to them.