NCOIL Ire Up On Accreditation

The National Conference of Insurance Legislators is once again taking on state insurance regulators–this time on the issue of accreditation.

The state lawmakers contend the National Association of Insurance Commissioners has created so many accreditation standards that they are usurping legitimate legislative prerogatives.

In a letter to Walter Bell, NAIC's president and Alabama's insurance commissioner, NCOIL's president, Michigan Sen. Alan Sanborn, R-Richmond, wrote that NCOIL “believes the manner in which models are chosen as accreditation standards has been subtly degraded over the years–and perhaps, in a manner of speaking, when no one was looking.”

NCOIL has specifically objected to the recent passage of the Insurance Receiver Model Act and the amendments to the Model Audit Rule as examples of the regulators exceeding their roles in setting state insurance regulatory law.

Accreditation has been something of a sore point between the two groups since the concept was established in the early 1990s with the introduction of solvency rules.

“Much has changed, yet much has remained the same,” Mr. Sanborn wrote. “The unraveling of what legislators have maintained as a meaningful process is evident.”

Sen. Sanborn quoted Commissioner Bell as telling him that the actual process for a law to become an accreditation standard is five years–a point the NCOIL chief disputes.

“When all is said and done, the NAIC program really leaves states one year to expose the model after NAIC deems the model or revision to a model a potential accreditation standard,” Mr. Sanborn wrote.

Commissioner Bell and Sen. Sanborn said the topic will be on the agendas of their group's respective summer meetings.

And in a possible related move, Mr. Bell announced this week that the NAIC has tightened the model law process so that both the parent and executive committees must give approval before drafting begins to ensure the topic is national in scope and worthy of the highest NAIC action.