NAIC Meeting Targets Reform in 2004
The National Association of Insurance Commissioners (NAIC) conducted its final meeting of the year on Dec. 6-9 in Anaheim, Calif. While the conference agenda had its fill of typical committee meeting topics—workers’ compensation, credit scoring, antifraud and insolvency, to name just a few—the hot topic of the conference centered on the future of insurance regulation.
Celebrations over the passage of the NAIC’s revised modernization plan in September, a document titled, “A Reinforced Commitment: Insurance Regulatory Modernization Action Plan,” was short lived. Pressure from Congress at recent hearings indicated that the timeline to implement the modernization plan would not suffice.
“The only problem with it is that Congress has made it clear in its most recent oversight hearings that it is not going to wait until the 2006 to 2008 time frames that the NAIC has set forth for accomplishing the Statement of Intent agenda,” said Lenore Marema, a policy analyst with the Alliance of American Insurers, in a statement. “State regulators need to work harder and faster to get the job done.”
With pressure coming from Congress to speed up state progress for reform, the NAIC leadership significantly beefed up its presence in Washington in 2002, and its newly elected leadership aims to continue that effort in 2004. In recent months, Congress has held hearings on the issue spurred by a report from the General Accounting Office titled, “Insurance Regulation: Common Standards and Improved Coordination to Strengthen Market Conduct Regulation.” Simply stated, the report detailed the dire need to modernize the system quickly. In addition, the Fair Credit Reporting Act was reauthorized last year, generating an increased interest in the regulation and oversight of insurance activities by the industry and legislators.
“Gramm-Leach-Bliley taught us a lesson,” Mike Pickens, Arkansas Insurance Commissioner and retiring NAIC president, said to the Industry Liaison Committee. “You better get to the dance before it starts; that is why we have concentrated our efforts at the federal level this year.”
Ernst Csiszar, South Carolina’s insurance commissioner and newly elected NAIC president, added, “We are going to continue on the path that has been set.” But as many on the Industry Liaison Committee stated, and the commissioners concurred, Congress is not going to wait. “We’ve already recognized that we don’t have until 2008 to get this done. We might have 2004 and part of 2005, but not much more time than that,” Csiszar said.
According to Bob Zeman, vice president of government relations for the National Association of Independent Insurers, some states have made significant progress toward regulatory modernization already, including New Hampshire, Louisiana and New Jersey.
“Consumers in those states are already beginning to reap the benefits of a more modern regulatory system,” Zeman said. “They have more companies to choose from and more coverage options. In addition, the cost of insurance—particularly in New Jersey—has started to drop as a direct result of increased competition and less costly regulation.”
Progress towards the NAIC’s statement of intent, originally released in March 2000, has been slow. With its renewed commitment, regulators have stepped up the pace for completing targeted goals. A common thread in the NAIC’s stated goals is to achieve uniformity in standards for market conduct, market analysis, producer and company licensing processes, and streamlining procedures to bring new insurance products to market more quickly.
On producer licensing reform, the NAIC announced at this meeting that fees for use of the National Insurance Producer Registry (NIPR) would be reduced next year. The NIPR is an online database system that aims to bring uniformity and efficiency to interstate agent licensing. Currently, 35 states participate in the registry.
According to Wes Bissett, vice president, state government affairs, for the IIABA, there are still quite a few barriers when it comes to the NIPR. “It has produced mixed results,” he said. “Most states have adopted it, but the largest states have not come on board.” Bissett explained that while the IIABA fully supports the objectives of the NIPR, there are a number of issues that need to be worked out, such as providing renewal or residence licensing. Currently, the NIPR only transacts new licenses for non-resident agents. The NAIC Modernization Action Plan calls for the NIPR to be fully implemented and functioning by the end of 2006. Bissett added that agent licensing reform will remain a top priority in 2004.
Whether modernization plans are put into action at the state level fast enough to prevent Congressional intervention remains to be seen. “At this point, it has to be said that the result of the NAIC Winter National Meeting was—message received,” Marema said in a statement.