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NAIC Backs Off on Supervisory Commission Idea

After facing strong opposition from state insurance legislators, the National Association of Insurance Commissioners has backed off its proposal to create a National Insurance Supervisory...
April 14, 2010

After facing strong opposition from state insurance legislators, the National Association of Insurance Commissioners has backed off its proposal to create a National Insurance Supervisory Commission (NISC). A previous NAIC draft proposal would have called on Congress to create a commission made up of state regulators that would develop national standards for certain insurance areas.  States that were not members of the proposed commission - and failed to take independent action on uniformity standards developed by the commission within a given time period - would have been subjected to preemption by a federal Office of Insurance Information or Office of National Insurance.

The proposal drew fierce opposition from the National Conference of Insurance Legislators (NCOIL). At a one-hour hearing that had been hastily scheduled by the NAIC last fall, then-President-elect of NCOIL, Kentucky legislator Bob Damron, warned against cutting a deal with Congress - which he identified as "the enemy" - that could be seen as taking away authority from state lawmakers and regulators. "If we stay united, I don't think Congress is going to run over us," Damron said. "I think that eventually they'll just go away."

During last week's meetings, the NAIC said that it would reserve the right to pursue such federal action in the future, but that it will now seek state-based and state-driven solutions to regulatory modernization - an aim that won support from the legislators. Commissioner Leslie A. Newman of Tennessee said the NISC proposal "died in a very painful and brutal manner."

Alabama State Rep. Greg Wren warned that there is momentum in Washington to begin a "legislative assault" on state regulation, contending that proponents of state regulation need to go on the offensive rather than play defense. He accused proponents of federal regulation "are trying to put out a fire that does not exist in America today" and, referring to their use of what he called old, stale and inaccurate arguments added, "The red herrings are flopping on the boats."

Lawmakers Agree to Focus Modernization on State Level (National Underwriter 4/5/2010)