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NAIC Spring Meeting Highlights

The National Association of Insurance Commissioners (NAIC) held its spring national meeting March 25-28 and covered a wide range of critical issues affecting producers, including...
April 7, 2010

The National Association of Insurance Commissioners (NAIC) held its spring national meeting March 25-28 and covered a wide range of critical issues affecting producers, including licensing, federal regulation, health insurance and managed care, and natural disaster preparedness. PIA National attended and participated in the meetings.

Health care was main issue discussed at this meeting and PIA will continue to be involved in all the discussions surrounding implementation of the new health care law at the NAIC.

The Health Insurance and Managed Care (B) Committee met on March 27, 2010 to discuss several issues relating to the new healthcare law. The regulators discussed the NAIC's role in the recently passed federal healthcare reform legislation and committed themselves to working together with all interested parties. The NAIC decided to use their existing committee structure to address these issues and will be relying heavily on the Consumer Liaison Committee, chaired by Commissioner Chavez (NM) and the Industry Liaison Committee, chaired by Commissioner Bradford (AR).

The Producer Licensing (EX) Task Force meeting focused on how to create greater uniformity in business entity licensing.  The regulators received a report on recent assessments of state compliance with NAIC reciprocity and uniform licensing standards. There are currently 47 jurisdictions certified as reciprocal, and the progress report indicates 86 percent compliance with NAIC uniform licensing standards, an increase from 80 percent last year.

The task force reported 20 bills were enacted in 17 states in 2009 that address licensing. This year, there are 16 bills in 13 states that seek to deal with licensing issues. Eight of these bills relate to fingerprinting, 15 cover continuing education, ten are related to lines of authority and eight cover pre-licensing requirements. The task force discussed the status of H.R. 2554, the National Association of Registered Agents and Brokers Reform Act (NARAB II), which was adopted by the U.S. House of Representatives. The regulators said they are uncertain whether this bill will be introduced in the Senate. The regulators also discussed a proposal that would make uniform producer licensing standards part of the NAIC's Accreditation Program. The PIA National Business Issues Committee is discussing uniform rules for business entity licensing.

The Catastrophe Insurance (C) Working Group met to receive an update on the recent earthquakes in Haiti and Chile. Dr. Ray Spudeck, chief economist at the Florida Office of Insurance Regulation (OIR), reported that the difference in damage was very stark. In Haiti, where there are no building codes, there was massive destruction, but in Chile, which has strong building codes, there was relatively minor damage and loss of life.

The regulators also discussed the NAIC's progress on a white paper on defective drywall (a.k.a. "Chinese Drywall"). Peg Ising, a regulatory consultant with Nelson, Levine, DeLuca & Horst, said problems with defective drywall are beginning to spread into other states outside Florida and Louisiana. Dr. Spudeck added the Consumer Products Safety Commission (CPSC) has conducted tests showing issues with U.S. drywall similar to the problems seen in Chinese drywall, and the problems associated with this drywall have spread with over 35 states now receiving complaints.  The working group was told of plans by the NAIC to issue a white paper on the issue by this summer.

The Crop Insurance (C) Working Group met to discuss regulators' concerns with the inevitable preemption of crop insurance adjuster licensing. Congress, through the Risk Management Agency (RMA), could preempt certain states' licensing authority in this area beginning as early as July 1, 2011. The NAIC previously surveyed all states to assess whether they could allow a third-party to test crop adjusters to obtain a license. These results indicated that as many as 14 states could be preempted. Officials from Delaware testified that the state is working on a regulation to avoid preemption.

The working group received an updated report from NAIC staff on states' efforts to avoid federal preemption of crop adjuster licensing. All 14 states plan to implement changes so that federal preemption will not occur. NAIC staff will look into investigating changes that might be needed to the NIPR Producer Database (PDB).

Working group members heard a report from the RMA on the Crop Adjuster Proficiency Program (CAPP) of the National Crop Insurance Services (NCIS). PIA members have been active in these discussions by assisting our regulators and legislators as they prepare for the new RMA regulations.

Please continue to send comments or questions to: David Eppstein, PIA National Assistant Vice President for Regulatory Affairs davidep@pianet.org.