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NAIC CEO Dr. Therese M. Vaughan Discusses Her Priorities During PIA Federal Legislative Summit

WASHINGTON, April 2, 2009 - In an exclusive video interview conducted for the annual National Association of Professional Insurance Agents (PIA National) Federal...
April 2, 2009

WASHINGTON, April 2, 2009  - In an exclusive video interview conducted for the annual National Association of Professional Insurance Agents (PIA National) Federal Legislative Summit, the new CEO of the National Association of Insurance Commissioners (NAIC) Dr. Therese M. Vaughan shared her perspectives and commented on her priorities.

Vaughan said that Congress is looking for solutions and "is tired of hearing people say they want an optional federal charter, [and] they're tired of hearing supporters of state-based systems say 'don't do anything, the system is fine just the way it is.'"

Asked to elaborate on her priorities and the current debate on Capitol Hill regarding regulatory reform, Vaughan emphasized that state insurance regulation protects consumers, and that the state-based system of insurance regulation is actually a national system that is state-based.

"First of all, the state system does protect consumers. That's clearly true," Vaughan said. "There's no system that's perfect… you could point to issues in any regulatory system, but we are there on the ground dealing with consumers. There's a lot of talk right now about global financial stability. We are there worrying about the family's financial stability, the promises companies have made and whether consumers are going to benefit from those promises."

"The second thing I would emphasize is that this is not just a state-based system, this is a national state-based system," Vaughan said. "And there is a tremendous amount of coordination that goes on. We have built a structure over the last 20 years or so that has a tremendous amount of interaction between the states, it's got a lot of peer review, it's got a lot of states advising other states, it has standards in areas that we all adhere to, [such as] uniform processes, centralized databases, centralized review processes, oversight of activities that are going on all over."

Vaughan added that the coordination that goes on among state regulators benefits consumers and the system has checks and balances that pick up problems.

"These things make for a system that has a lot of checks and balances in it that allows for states to advise each other," she said. "[It] allows for states to catch problems that other states miss, and that's one of the big benefits of our system, this ability to protect consumers on the ground at the same time that we have this overlay of working together to identify problems and solve problems ... it helps us correct errors before they get to be too big."

Improvements still need to be made to the state-based system, according to Vaughan. "It's a good system, but can we make it better. This is an opportunity to look at ways to make the state-based system function more as a highly coordinated national system," she said. "I think if we look 3-5 years from now, we will see some changes in the relationship among the states, and I go back to the Interstate Compact … I think that's an example of the kind of thing that can be done to make this a more effective national system and deal with some of the inefficiencies we have."

Vaughan also revealed that the NAIC is forming the Center for Insurance Policy and Research, a place to allow policymakers in Washington, D.C. to access the NAIC and its insurance information more easily.

In addition, she is advertising for a visiting position, a Distinguished Scholar in Insurance Regulation. "We'll be getting a professor who's on sabbatical and wants to spend a year in the world of insurance regulation and help us think through the difficult problems," she said, adding that she appreciates what the academic world can add because of her background as a professor of insurance and her father's 41 years as a professor of insurance.

The interview with Vaughan was conducted by PIA National Executive Vice President & CEO Leonard C. Brevik.

On February 18, 2009, former Iowa Insurance Commissioner Therese M. Vaughan assumed her official duties as the new Chief Executive Officer of the National Association of Insurance Commissioners (NAIC). The longest-serving commissioner in Iowa history, Vaughan also was an active member of the NAIC, completing a term as president in 2002. Prior to joining the NAIC, Vaughan was the Robb B. Kelley Distinguished Professor of Insurance and Actuarial Science at Drake University, a position she held since January 2005.

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America(SM). PIA's web address is www.pianet.com.

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