PIA is telling the National Association of Insurance Commissioners (NAIC) that two draft models slated for additional consideration this week are not ready for adoption. The NAIC is holding its winter meetings December 3-6 in Chicago. PIA will be there, testifying on key issues. In advance of the NAIC meetings, PIA affiliates are sharing concerns regarding these items with commissioners in their states. Issues of concern include:
- An NAIC draft model on insurance premium accounts.
- An NAIC draft model on a central FBI-NAIC fingerprint system for insurance producers.
- NAIC’s next steps to modernization of insurance producer oversight.
Insurance Premium Accounts Model: This model would direct the segregation of insurance premiums from other operating monies of the insurance producer, and govern the manner in which PIA agencies would need to organize their accounts and procedures. PIA National supports each state deciding what the status of these accounts will and should be, and appreciates that a number of states will decide not to make changes in their current requirements.
PIA National has been responding to NAIC drafts so that any final model will be workable for PIA member agencies. It is critical that PIA agency owners members do not find an NAIC proposal that could create unintended, but nonetheless real conflicts.
This model needs further work and is not ready to be adopted by the NAIC’s D-Committee. PIA is asking that the D-Committee send this model back to the Producer Licensing Working Group for additional work. In so doing, we further suggest that the Working Group do so with a smaller group to work out language to then be considered by the full NAIC Producer Working Group during the NAIC meetings in early spring of 2006.
Fingerprint Model: The NAIC as a whole, must appreciate that this model is not ready for adoptive consideration. There is a large series of issues that the NAIC has yet to resolve from a policy standpoint, much less making clear the actual process, storage, access and business rules that will apply to this proposal. These make drafting a model premature.
These issues raised are critical, such as: What will be the confidentiality and FCRA business rules and processes that will both apply to, and be available for, insurance producers coming into this system? Can a state grant such authorities to its DOI regarding access to the FBI system, as well as grant the DOI permission to grant access on their behalf by the NAIC to the FBI and so forth? In addition to having a system that best serves the protective interests of the public (as well as any system can), issues of PIA members’ legal rights are involved, needing to be better addressed by this particular NAIC process.
FY 2006 NAIC Next Steps to Modernization of Insurance Producer Oversight: The NAIC will consider what steps will be taken next during 2006. PIA National agrees with the NAIC that much progress has been made over the last several years in moving the insurance producer state insurance oversight system and its requirements further towards the goal of a modern and effective all-state system. PIA National also agrees with NAIC that these accomplishments are just the beginning, and as such must be built upon with a well-reasoned and effective next steps effort.
Some have advised the NAIC that the insurance producer licensing and oversight system is in worse shape than ever. This is not what PIA members have made clear to us. PIA National has developed some initial information for NAIC in this area that we believe must be shared with the commissioners as a whole. PIA National will continue to work with PIA affiliates in identifying further improvements as we develop more details from among our members.
PIA Senior Vice President Patricia A. Borowski patbo@pianet.org and Director of State Affairs David Eppstein davidep@pianet.org will represent PIA at the NAIC meetings in Chicago.
PIA Comments on NAIC Models (11/28/05)
PIA Comments on Producer Working Group (11/28/05)
November 30, 2005