National Conference of Insurance Legislators (NCOIL) is expressing grave concerns with a proposal by the National Association of Insurance Commissioners (NAIC) to form a commission intended to work alongside a future federal insurance regulator.
In a letter to NAIC president Roger Sevigny, NCOIL president Rep. Robert Damron enumerated the faults NCOIL sees in the creation of a National Insurance Supervisory Commission (NISC). Damron said the creation of NISC would usurp state regulation of insurance.
“Your proposed commission of insurance regulators would mandate insurance standards for all states and preempt existing state statutes,” Damron wrote. “Once a state joins the commission, NISC would oversee insurance regulation “without further state legislative action” in many areas, such as producer and company licensing, life insurance and other asset-based products, surplus lines; and potentially, market conduct, solvency regulation, and reinsurance.”
NAIC has proposed the NISC as state-sponsored body that would channel state information to a potential federal insurance office housed within the Treasury Department. The Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173), which passed the House on Dec. 14, mandates creation of a Federal Insurance Office to monitor the insurance industry and negotiate international agreements.
While NAIC presents a NISC as a necessary counterbalance to any federal insurance office, NCOIL sees it as tacit support of federal regulation and a stepping-stone to a federal charter for insurers. “Your willingness to turn your back on the state-based system and join with the federal government to secure a seat at the proverbial table is alarming,” Damron states. “We feel that by forming an alliance with a federal insurance office, the NISC lays another paving stone in the path toward federal regulation of insurance— one that will leave states and taxpayers holding the bag.”
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