NU Online News Service, Jan. 8, 12:33 p.m. EST
The National Association of Insurance Commissioners said it wants to continue discussions with two state lawmaker groups that have criticized its national commission proposal.
The NAIC's concept of a National Insurance Supervisory Commission (NISC) is an attempt at regulatory reform with the goal of uniformity. It calls for an act of Congress to authorize states to form a body consisting of regulators.
It has advanced the idea in the wake of calls by Congress for national control of insurance regulation and proposed legislation to create a federal insurance office.
Under the NAIC's proposal states would independently join the commission, which would develop uniform regulatory standards in certain subject matters that states would later enact.
But for states that fail to comply with the national standard, there would be federal preemption through a federal insurance office.
State legislators have assailed the plan as a move that would allow federal authorities to usurp the states' insurance lawmaking function.
Lawmakers criticized the proposal at two successive NAIC national meetings with both the National Conference of Insurance Legislators (NCOIL) and National Conference of State Legislators (NCSL) voicing opposition.
The NAIC, in a statement issued to NU Online, said in response to the criticism from legislators, "State regulators look forward to continuing discussions on the important matter of state insurance regulatory modernization.
"We intend to continue to engage legislators and other stakeholders in the coming months. We view NISC as a first step in an ongoing dialogue about insurance regulatory reform and welcome a serious and thoughtful discussion with stakeholders."
In a December letter to the NAIC, NCOIL officers wrote, "We see little, if any, role for legislators and other state officials who have partnered with you over these many years to ensure the health and welfare of consumers and insurance businesses in the states. Your willingness to turn your back on the state-based system and join with the federal government to secure a seat at the proverbial table is alarming."
The NCSL's Communications, Financial Services and Interstate Commerce Committee also last month unanimously voted to move forward on a working draft opposing NISC. Committee Chairman and Rhode Island State Rep. Brian Patrick Kennedy, D-Hopkinton, said a resolution in final form will likely come in the spring.
The NCSL draft calls the NISC proposal "a premature and misguided effort that will not appease those who only desire full federal control of the business of insurance," and NCSL "further finds that the NISC proposal is an unwarranted preemption of sovereign rights of states and, in particular, the constitutional authority of state legislatures to decide state insurance policy…."
Mr. Kennedy said committee members "expressed extreme concern about the NAIC plan and the lack of any effort by the NAIC to make changes to the document since the Sept. [NAIC National Meeting in National Harbor, Md.]."
He added, "Legislators expressed concern that the NAIC was tackling this issue on their own and failing to address any input provided to them, and thus the best solution would be to scrap the plan and allow a neutral organization to draft a working document."
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