Interstate Compact Supporters Remain Hopeful Holdout States Will Join
April 1, 2014 by Thomas Harman, associate editor, BestWeek: Tom.Harman@ambest.com
ORLANDO, Fla. – Supporters of the interstate insurance compact model designed to help life insurers speed their products remain hopeful the remaining few jurisdictions that have not approved it ultimately will — and in so doing meet a Federal Insurance Office recommendation to do so.
During the National Association of Insurance Commissioners Spring National Meeting in Orlando, the NAIC Management Committee and the Interstate Insurance Product Regulation Commission celebrated the 10th anniversary of the formation of the interstate compact. The compact began when Colorado and Utah become the first states to ratify it and seven others followed during the first year.
Karen Schutter, executive director of the commission, told Best’s News Service 43 states have now approved the model, with Montana and Alaska doing so in 2013. Among the nine jurisdictions that have not approved it are California, New York and Florida. The creation of the compact resulted in the formation of the commission in 2006 once 26 states covering 40% of premium volume nationwide adopted the model.
The interstate compact model was created to promote efficiency in the life and annuity lines of business by developing uniform product standards and speeding approval within participating members. Insurers have found getting their products to market in IIPRC states requires only a matter of weeks instead of wading through individual state filings over a minimum 18-month period.
The FIO in its insurance industry modernization report last December said state-based insurance product approval should be improved by gaining participation of every state in the IIPRC and by expanding the products subject to IIPRC approval (Best’s News Service, Dec. 12, 2013). “State regulators should pursue the development of nationally standardized forms and terms, or an interstate compact, to further streamline and improve the regulation of commercial lines,” the FIO report said.
Schutter said Florida passed legislation in 2013 that was initially proposed as a compact model, but changes were made that keep the IIPRC from considering it as a member. The new law in Florida will take effect on July 1. It included the model compact language, but added provisions that omits a compact provision that participating states adopt and require that the rules, uniform standards and any other requirements of the commission shall be provisions exclusive to the content approval and certification of such products. The new law did not meet the requirement for contract membership that such laws be substantially similar to the compact.
To date, there is no effort to amend or repeal the law in 2014. Despite this, Schutter was optimistic about what Florida had done. “Florida made a step forward,” she said.
Of the states that haven’t approved the model, New York is the only one with a bill active, S 2895. The bill passed the Senate last summer. However, it died in the Assembly and was returned to the Senate, which is again moving the bill.
States such as Illinois, New Jersey and Oregon were among the last to approve the model and did so reluctantly. But Schutter said those states are now among the program’s most active participants.
Management committee Chair Roger Sevigny, New Hampshire insurance commissioner, said the industry has been more than willing to participate in the IIPRC and said he is hopeful that other holdouts ultimately will join.
(By Thomas Harman, associate editor, BestWeek: Tom.Harman@ambest.com)
