NAIC DEBATES FRAUD PROVISION

On behalf of the nation’s insurance commissioners, NAIC President and Kansas Insurance Commissioner Kathleen Sebelius is urging Congress to remove a provision from HR 1408, the Financial Services Antifraud Network Act of 2001, that gives the
General Accounting Office (GAO) blanket audit authority over state insurance officials, programs and activities—even though these offices are established and funded entirely under state laws and constitutions. Sebelius stated that the NAIC and its members believe the mandatory GAO audit authority set forth in Section 117 violates state sovereignty provisions of the U.S. Constitution. She added that while Congress has the power, if it chooses, to regulate interstate insurance commerce directly, it does not have the power to federally regulate the process of state regulation. While lending NAIC support to the bill as a whole, Sebelius objected to Section 117, saying the sovereignty issues extend far beyond state insurance regulation.