NAMIC: States Seem Amenable To Less Regulation
NU Online News Service, Oct. 6, 10:18 a.m. EDT?States seem to be growing supportive of less intrusive regulation of insurance, especially as it deals with setting rates, a National Association of Mutual Insurance Companies official told securities regulators.[@@]
NAMIC Senior Vice President for State and Regulatory Affairs Roger H. Schmelzer said another "underreported" major trend in insurance public policy is "a subtle shift of power" from regulators to state legislators with respect to where insurance public policy originates."
Mr. Schmelzer made his comments at the annual meeting of the National Association of Securities Administrators Association (NASAA), held in Scottsdale, Ariz.
"There is an emerging consensus that insurance regulation should not impede marketplace competition," Mr. Schmelzer said, pointing to legislative action in numerous states over the past several years to liberalize rate-making laws.
"States such as New Jersey and Louisiana have watched their markets shrink and have actually done something about it." He noted that Reps. Mike Oxley, R-Ohio, and Richard Baker, R-La., chairman of the House Financial Services Committee and its key Capital Markets Subcommittee, respectively, "have even recognized open rating competition in their initial draft of the SMART bill (the State Modernization and Regulatory Transparency Act)."
Regarding the perceived shift in power from state regulators to legislators, Mr. Schmelzer said, "Legislators now embrace the reality that they set public policy in their states and insurance regulators administer it."
He cited efforts of the National Conference of Insurance Legislators (NCOIL) to create model legislation on commercial and personal lines rate modernization, portions of which are now law in 24 states, as well as a recently approved market conduct model that has been endorsed by the National Association of Insurance Commissioners (NAIC).
He also took note of the work of NCOIL to approve model legislation on credit-based insurance scoring, saying that the NCOIL model is now law in 24 states.
While not commonly thought of as reform, Mr. Schmelzer said it "is tangible evidence that states are taking responsibility for their regulatory environments. This is what they need to be doing and not a moment too soon."
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