NCOIL Wants A Piece Of NAIC's Cash

A state legislators' group, seeking to beef up its control of insurance regulation, is considering a move to grab 4 percent of the funds that currently go to the organization run by the nation's insurance commissioners.

Members of the National Conference of Insurance Legislators are scheduled to take up the issue at their annual meeting in Las Vegas that begins tomorrow. At issue are the state assessments currently paid to the National Association of Insurance Commissioners.

NCOIL's proposal follows a consultant's report it commissioned that produced a "Study on State Authority: Making a Case for Proper Insurance Oversight."

NAIC had no immediate comment on the issue, which follows tension that has lately developed between the commissioners and NCOIL.

A draft of the second part of that study will be reviewed by NCOIL's Insurance Legislators Foundation Board (ILF) and the group's executive committee.

The proposed resolution to reallocate state assessments that now go to the NAIC to NCOIL says that the NAIC annually assesses each state a fee based on its amount of insurance premium as a percentage of the total premium volume of all member states.

In aggregate that amount totaled: $1,917,841 in 2005; $1,968,635 in 2006; a projected $2,015,610 in 2007; and a budgeted $2,063,932 in 2008, according to the ILF.

The ILF goes on to say that the NAIC's revenues exceeded expenditures as follows: $4,453,238 in 2005; $4,976,189 in 2006; $2,801,418 projected in 2007; and $1,889,983 budgeted in 2008. And assets less liabilities, according to the ILF, are: $54,353,517 in 2005; $58,652,480 in 2006; $55,414,838 projected in 2007; and $57,304,821 proposed in 2008.

John Lobert, Property Casualty Insurers Association of America (PCI) senior vice president for state government relations, said the amount sought by NCOIL "is a small percentage, 4 percent of the NAIC budget. The rest comes from database fees charged companies, product sales and filing fees."

He said PCI just received the proposal and has not taken a position on it, and probably would not until the matter came up for discussion by NAIC.

The proposed ILF resolution says that since the funds at issue are not needed to support programs and services, and NCOIL will need additional funds to continue to contribute to state regulation, it will be resolved to have NCOIL urge members to have funds appropriated to state insurance departments for payment to NCOIL rather than NAIC.

The proposed resolution also calls for the same assessment formula to be used that is currently employed by the NAIC and calls for NCOIL's executive director to take the steps necessary to accomplish the objective of the resolution.

The ILF study that is being developed calls for the strengthening of the authority of insurance commissioners in states, particularly since there is often a combination of financial services divisions, according to Susan Nolan, NCOIL's executive director.

Consequently, she said, legislators will need to oversee these activities and will need more resources to do so.

The discussion draft of the study from which the resolution is derived offers six recommendations:

o Increase NCOIL funding resources and membership.

o Clarify regulatory roles, enhancing insurance regulators' authority by restoring agencies' stature.

o Increase legislative oversight of insurance regulation.

o Consider strengthening state insurance regulation through expansion of the Interstate Compact.

o Support an independent commission of stakeholders in considering how state insurance regulation can be further strengthened.

o Open all NAIC meeting sessions.

The open session issue has been one repeatedly raised by state legislators, including Rhode Island State Representative Brian Kennedy, D-Hopkinton.

In June, Kentucky State Rep. Robert Damron, D-Jessamine, who is the NCOIL treasurer, was barred from an NAIC meeting session because his name was on a "Do Not Admit" list given to security guards. NAIC officials apologized to Rep. Damron and said this was a mistake.

Mr. Kennedy in June sent a letter to the insurance committees of 50 state legislatures suggesting in part that they consider holding hearings "about the amount of money that the NAIC is profiting from the insurance information filed by your state into the NAIC insurance database."

He also suggested they scrutinize every proposal submitted by their insurance commissioner or supervisor that comes "with the imprimatur of the NAIC."