SMART Debate Looming
Washington
The Republican leadership of the House Financial Services Committee, which plans to complete work on legislation setting federal standards for state regulation by mid-June, hopes the new leadership of the National Association of Insurance Commissioners will become more involved in the drafting process, according to several Washington lobbyists.
A letter to the NAICsigned by the panels chairman, Rep. Mike Oxley, Ohio, and Rep. Richard Baker, La., chair of the key Capital Markets Subcommitteedeals with getting input and making revisions to the State Modernization and Regulatory Transparency Act.
The panel worked on legislation from April 2004 until Congress adjourned last November, but the bill was never introduced nor made public because no consensus acceptable to all interests was reached.
State commissioners, led by then NAIC president Ernst Csiszar, Arkansas Commissioner Mike Pickens and New York Superintendent Greg Serio, "were very engaged" in the process of drafting last year's bill, one lobbyist said. All three have since left their regulatory posts.
Since a total of 10 commissioners have left over the last year, Reps. Oxley and Baker are concerned that the NAIC "risks being marginalized" unless the commissioners take a more active role in drafting the bill, the lobbyist said.
The lobbyist said Reps. Oxley and Baker are concerned that the new regulators' lack of involvement will create the same situation as existed during work on the 1999 Gramm-Leach-Bliley Act, where existing federal regulators like the Federal Reserve Board and the Securities and Exchange Commission played a far greater role in drafting the bill than insurance regulators.
The bill will need bipartisan support, Capitol Hill sources say. In recent comments, Rep. Barney Frank, D-Mass., ranking minority member of the committee, said his perception of the shape of federal intervention in insurance regulation would be to "require states to defer to other states," encouraging interstate compacts and reciprocity.
Reps. Oxley and Baker also indicate they view this approach as having the most support from Republicans on the committee.
However, Rep. Frank implied that he would support legislation facilitating such reciprocity only for the life industry. "Property-casualty regulation must remain local," he stated emphatically, an approach some in the p-c industry reject, but which most state regulators support.
The p-c industry wants a market approach to regulation, and one of the challenges Reps. Oxley and Baker face in getting a bill through the committee is balancing those concerns.
Reproduced from National Underwriter Edition, March 17, 2005. Copyright 2005 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.