Some of the nation's insurance regulators yesterday, in the course of rejecting a bid by life insurance companies for looser reserve and capital requirements, indicated they see a need for guidelines to define emergency situations.
Life carriers, who saw their request rejected 16-1 during a teleconference meeting of the National Association of Insurance Commissioners, had contended they had an emergency because of a credit crisis and a rules change could make $18 billion in capital available to them.
In rejecting the request for a regulatory change the possibility that the NAIC might address relaxed capital and surplus requirements for life insurance carriers through its non-emergency model law process was left open.
Commissioners said repeatedly during their discussion yesterday that a case had not been made that an emergency existed.
In reaction, legislators such as Kentucky State Rep. Bob Damron, D-Nicholasville, applauded the commissioners' decision calling it "prudent" and saying that it is "a good step in defending state-based regulation."
The request that the NAIC define an emergency was made by Tom Hampton, commissioner of the District of Columbia, and affirmed by Tom Sullivan, Connecticut insurance commissioner. Both Mr. Hampton and Mr. Sullivan co-chair the NAIC's capital and surplus working group, which was formed to examine the life insurers' proposal advanced by the American Council of Life Insurers (ACLI).
New York Insurance Superintendent Eric Dinallo said he does not see the need to define "emergency" since "the ACLI posited it as an emergency" and not state insurance regulators.
"Commissioners acted exactly as regulators should." They looked at the request, gave it a complete review and offered "a fast, clear, guided answer," he said.
During the call, Al Gross, commissioner of the Virginia State Corporation Commission's Bureau of Insurance, said the NAIC should also consider the charge of how to address state-permitted practices and balance the right of domiciliary states with the need for uniformity.
Mr. Dinallo said that while he recognized the benefits of uniformity, a "one size fits all approach" is not always useful since there are local issues related to domestic companies.
The day before yesterday's action the NAIC had held a working group hearing on the life insurers' request, at which Consumer Federation of America representative Robert Hunter called a "sham." He threatened to have CFA withdraw support for state-controlled regulation of insurance if the proposal was approved.
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