WASHINGTON–A panel of the nation's insurance regulators approved a proposal to relax capital and surplus requirements for life insurers after a hearing yesterday that was slammed by a consumer affairs representative as a "sham."
Robert Hunter, representing the Consumer Federation of America, Washington, and the Center for Economic Justice, Austin, Texas, ripped into the regulators during a special hearing held here by the capital and surplus working group of the National Association of Insurance Commissioners, Kansas City, Mo., and suggested the group might withdraw its backing of state-controlled insurance regulation.
The hearing was followed by a vote in which the controversial proposal, floated by the American Council of Life Insurers, Washington, was largely adopted and passed up to the NAIC's executive committee and plenary. A vote by those bodies is scheduled for tomorrow.
During Mr. Hunter's presentation, he said that he believed the hearing was a "sham" and commissioners had already decided to advance the proposal. In fact, he said the CFA is so disenchanted with the current system of state-based regulation that there is a process underway at CFA to decide whether to continue to support it.
If a decision is made to support federal regulation, "there won't be an 'O' in it," he said, referencing the effort by some insurers to secure optional federal insurance charter legislation.
Mr. Hunter said the lack of openness about the process and the speed with which the proposal was advanced as well as the lack of consideration for consumer protections suggested a lack of interest in looking after consumer interest.
Before it voted the panel also heard from the American Council of Life Insurers and the Affordable Life Insurance Alliance, both in Washington.
One of the main questions that was raised, which could resurface when the proposal comes to a final vote tomorrow, is whether there was real urgency to the ACLI proposal.
The question was raised by Mr. Hunter and New York Insurance Superintendent Eric Dinallo.
But, Steven Goldman, New Jersey commissioner of banking and insurance, disagreed. "Nobody knows where the bottom of this financial crisis is and it changes day by day for the worse."
The proposed changed do not apply to property-casualty insurers.
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