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Hastily-Scheduled NAIC Public Hearing on Supervisory Commission Announced

The National Association of Insurance Commissioners (NAIC) has scheduled a public hearing on regulatory modernization and the current National Insurance Supervisory Commission (NISC) discussion draft....
December 2, 2009

The National Association of Insurance Commissioners (NAIC) has scheduled a public hearing on regulatory modernization and the current National Insurance Supervisory Commission (NISC) discussion draft. States would use this entity to identify and develop standards that they would subsequently enact and enforce. The NISC would partner with a planned national insurance office within the federal Treasury Department. The Regulatory Modernization Public Forum is scheduled for Saturday, December 5 from 4:00 - 5:00 p.m. during the NAIC meetings in San Francisco.

Rep. Brian Patrick Kennedy, a state representative from Rhode Island and past president of the National Conference of Insurance Legislators (NCOIL) expressed disappointment with the scheduling of this public forum in an email to industry leaders. Kennedy said the NAIC requested that NCOIL not put the NISC proposal on the agenda for the NCOIL summer meeting and NCOIL honored the request. Kennedy said NCOIL was told in September the NAIC would work cooperatively with state legislators, attorneys general and other interested parties to arrange for a summit to discuss the proposal in depth.

"I am very disappointed to now hear that the NAIC has chosen to schedule a public hearing in San Francisco, instead of moving forward with the planned summit of interested parties, including state legislators," Kennedy said. "By moving forward with a hearing, the NAIC is showing a total disregard for the vocal message delivered loud and clear by state legislators in September… Rather than the NAIC constantly trying to sell out for a seat at the table with Congress, the NAIC should be using some of their time and energy to start the necessary conversations with their so called state partners."

What It Means to Agents:  PIA supports state efforts to streamline, simplify, and modernize insurance regulation; however we think the best way to achieve our goals is through our state authorities, not a new federal insurance office with preemptive power. The NISC proposal is positive in that it is state-based, but it is flawed in that it is predicated on a Federal Insurance Office (FIO) being created.

PIA members are concerned that the current proposal calling for a federal insurance office with preemptive power may lead to unintended consequences that could make the system worse, not better. We fully support the Interstate Insurance Product Regulation Commission (IIPRC) because it preserves the authority of our state legislators and regulators while streamlining the process. While the IIPRC in its current form is limited, it demonstrates that a formal multi-state insurance oversight forum is possible and well received by state authorities.  The IIPRC may provide the foundation upon which an improved national system for insurance regulation can be achieved.

We firmly believe that this needs to be a joint all states effort and strongly support the NAIC's efforts to work with other state based organizations such as the National Conference of Insurance Legislators (NCOIL), National Conference of State Legislatures (NCSL), National Governors Association (NGA) and the National Association of Attorneys General (NAAG), among others.

PIA will attend the NAIC meetings, including the public hearing on the NISC proposal and will make our views known.

Discussion Draft of NAIC's National Insurance Supervisory Commission (NISC) Proposal (PDF file)