After Hitting 50-Year Milestone in Insurance, NAIC Chief Executive Nelson Prepares to Move On
October 12, 2015 by Thomas Harman, Washington Bureau manager, BestWeek: Tom.Harman@ambest.com
WASHINGTON – On Oct. 1, Sen. Ben Nelson, the National Association of Insurance Commissioners’ chief executive officer, reached the 50-year milestone in his insurance career.
“Everything I’d done politically or professionally has involved supporting state-based regulation,” said Nelson, who started out as a regulator in the Nebraska Insurance Department. “It seemed to me to be time to go in a different direction.”
The NAIC said last week Nelson would not renew his contract as CEO, which expires Jan. 31, 2016 (Best’s News Service, Oct. 9, 2015). Nelson said it is “way premature” to discuss any process to finding his replacement. “I’m going to still be CEO until Jan. 31,” he said. “There’s no activity in that regard. NAIC will reflect on what they want for the next CEO and that will be part of the process.”
He said he would look to return to his private law practice and would spend some time in other areas of interest, including in his role as a senior adviser at Agenda, the Washington, D.C.-based public affairs advocacy firm specializing in corporate communications, public relations and digital and creative services.
Nelson told Best’s News Service his successor “will have less involvement in international issues. That’s what has to be decided.”
When he was chosen to take the CEO job in 2013, the NAIC was interested in a CEO that could provide support for state regulators on Capitol Hill and federal agencies. Nelson said he was asked to address the efforts by the International Association of Insurance Supervisors as they moved toward proposal of international insurance regulations, ultimately including a global capital standard for companies designated as globally systemically important insurers.
Nelson said he hoped observers would remember his efforts to keep the Federal Insurance Office from imposing on state-based regulation, or as Nelson put it, “keep FIO in its lane of traffic.” He said the federal agencies are increasingly recognizing the uniformity within the state-based regulatory system in some areas. “I thought it should have been recognized earlier, but it’s better to say that it’s good that it’s recognized now,” Nelson said.
Nelson said the current state of insurance regulation is likely to see the United States looking to preserve its state-based regulatory system against attempts to scrap it in favor of the international system under construction by the IAIS. “There’ll be similar goals — if not comparable, similar — goals for regulatory results,” he said. He said regarding capital structure, the United States and the IAIS and others are “looking for common goals, common results and different methods of getting there. For those who think this ends up with an all Solvency II system, that’s just ignoring different goals, differences in the system.”
He said there may be different methods of achieving common goals and a comparison of each might be warranted. There are already some areas of contact, such as supervisory colleges, Own Risk Solvency Assessment and discussions regarding holding company regulation. “We do not have to have the same system [worldwide],” he said. “Those who are waiting to see if one system prevails … I think it’ll be a long wait.”
The NAIC faces a range of issues, including solving questions about captives to dealing with covered agreements under the Credit for Reinsurance Model Law. “Clearly, cyber issues will be more important as time goes by,” he said.
Nelson will continue to work with state regulators to improve state-based regulation, as well as with the Treasury Department and the Federal Reserve — which are working on a domestic capital standard — in order to preserve both federal and state interests.
