The debate in Congress over insurance regulation will help spur a "slow and ponderous" National Association of Insurance Commissioners into action to reform the system, according to New York Insurance Superintendent Howard Mills.
"The [federal] threat is a good thing because it will force the NAIC to move with greater dispatch, and if state regulation of insurance is undermined, then it could be seen as the fault of the states," Mr. Mills said at an insurance seminar hosted by the City Bar Center for Continuing Legal Education, attended by regulators from several states.
Maryland Commissioner Steven Orr said that with 23 of the needed 26 states approving an interstate compact dealing with life insurance speed-to-market issues, the NAIC has been taking steps to answer its critics in Washington and among the big companies that 50-state regulation slows the marketplace.
Meanwhile, Mr. Mills said he remained concerned the federal government will opt out of any role in providing a backstop for terrorism risk once the Terrorism Risk Insurance Extension Act expires next year.
He recalled the attitude among some federal lawmakers at a Senate hearing he testified at, that the private market should solve the issue. "I told them the private market will provide a solution, but it will not be one you like." The result, he said, would be an exit of carriers from certain terrorism target zones that could stymie construction and other business enterprises.
In other matters, District of Columbia Acting Commissioner Thomas Hampton said the time was ripe for the NAIC and states to come to some resolution on the issue of collateralization requirements for reinsurers not domiciled in the United States. "If we don't do it now, a solution will be imposed up us," he said.
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