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Updates From the NAIC Summer Meetings

The National Association of Insurance Commissioners (NAIC) holds its Summer National Meeting from August 14-17 in Seattle. PIA National's Executive Vice President & CEO Len...
August 18, 2010

The National Association of Insurance Commissioners (NAIC) holds its Summer National Meeting from August 14-17 in Seattle. PIA National's Executive Vice President & CEO Len Brevik and Assistant Vice President David Eppstein are attending the meetings, which are underway. Here are some updates:

NAIC Passes Resolution Supporting Role of Agents in Healthcare: On Tuesday August 17, the NAIC's Executive/Plenary meeting overwhelmingly passed a resolution in support of the role of agents and brokers in health insurance distribution. The resolution, offered by Commissioner Mila Kofman (ME), was seconded by Director Mike McRaith (IL) and had 24 cosponsors. The resolution passed overwhelmingly with only one vote against. Commissioner Marcy Morrison (CO) voted against because she didn't think agents and brokers should be singled out. Several commissioners spoke in favor of the resolution including Director Mary Jo Hudson (OH) and Commissioner Kim Holland (OK). Previously, the NAIC Health Insurance and Managed Care Committee added a new charge to ensure appropriate producer participation in assisting employers and individual consumers making health care insurance purchase decisions. The vote to add this charge, proposed by Commissioner Kevin McCarty (FL), passed unanimously.

The NAIC's Producer Licensing Task Force discussed an industry proposal to streamline business entity licensing, but did not formally adopt the standards today. Task Force Chair Linda Hall (AK) characterized the proposal as an excellent basis for discussion but wanted to give the regulators more time to review the proposed standards with their department staff. PIA National worked closely with other producer and carrier representatives to develop the uniform standards and we are confident that the NAIC will adopt them soon.

The Task Force will schedule a conference call to further discuss this, so hopefully the standards can be adopted at the NAIC Fall meeting in Orlando October 18-21. When the new standards are adopted by the NAIC, we will work with the states to make sure they are implemented nationwide. Most of the standards can be implemented by regulation or by changes in department practice; however some standards may require legislative action. If these standards are adopted in most, if not all, jurisdictions, it will have a tremendously positive effect on producer licensing. The industry proposed eight additions to the NAIC's Uniform Licensing Standards. The proposal includes significant improvements to licensing including removing the requirement for a business entity to register as a foreign corporation as a condition of obtaining or maintaining a nonresident license.

Accreditation: At the last NAIC meeting, PIA Assistant Vice President for Regulatory Affairs David Eppstein suggested that perhaps producer licensing should be a part of the NAIC's accreditation process. Since then, this proposal has garnered widespread support, including NAIC President Jane Cline (WV), the New York Insurance Department, the American Insurance Association (AIA), the Property Casualty Insurers Association of America (PCI) and others.

The NAIC formed the Market Regulation Accreditation Task Force to discuss opening up the accreditation process to include other issues like producer licensing. During the Task Force meeting Sunday August 15, the proposal to add producer licensing to the accreditation standards provoked a lively discussion, however the regulators decided to not open up the process at this time. PIA was encouraged by the discussion and remains hopeful that perhaps in the near future the task force may consider including producer licensing in the accreditation standards.

The NAIC Catastrophe Insurance Working Group, chaired by Kevin McCarty (FL), met on Monday, August 16 to provide an update on their white paper on defective drywall, also called "Chinese drywall." The draft provides a background of the issue, including the latest information from the Consumer Product Safety Commission. The paper explores possible exposures, theories of liability, policy exclusions and theories currently being used to deny claims in both personal and commercial lines of insurance, potential remedies, and current litigation.

Medical Loss Ratios (MLRs) are expected to be the topic at a meeting of the Health Insurance and Managed Care Committee slated for Tuesday August 17. It will likely determine its recommendations on which services should be classified as direct medical service. "There's been a lot of discussion about what would qualify as a medical expense," said Sandy Praeger, the insurance commissioner for Kansas who chairs the national group's committee on health insurance and managed care. "We're really under the gun here to get something done," she said. The NAIC was designated by the federal healthcare reform law to draft medical-loss ratio rules, which would need to be certified by the U.S. Department of Health and Human Services.

At the Industry Liaison session, some commissioners voiced frustration that the sessions don't often lead to practical results. It was said that the insurance trade associations too often harp on problems that they are already hashing out in subject-specific committees. Illinois insurance Director Michael McRaith and other commissioners reportedly suggested that the liaison committee deal with direct process issues and not the industry concerns that are also argued in other committees. But David Snyder, vice president and associate general counsel at the American Insurance Association (AIA) argued that such a restriction wouldn't be productive. "I think the dialogue is best when it doesn't have that kind of constraint," he said.

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