NCOIL Meeting to Address Concerns Over How the NAIC Adopts Insurance Regulations
July 10, 2017 by Thomas Harman
MANASQUAN, N.J. – The National Conference of Insurance Legislators will continue discussions of its concerns about how the National Association of Insurance Commissioners adopts changes to insurance regulations without lawmaker involvement.
The talks are part of three days of NCOIL meetings set for July 13-15 in Chicago.
On July 14, the group’s NCOIL-NAIC Dialogue panel will continue discussions on incorporation by reference, which requires changes in state statutes when the NAIC makes minor amendments to its manuals and handbooks that become state law through incorporation.
But Joe Thesing, vice president, state affairs at the National Association of Mutual Insurance Companies, said the NAIC is exceeding its authority in this area. “We believe that they’re using it to make substantive policy changes, which is why we’re encouraging NCOIL to continue dialogue with the NAIC and with insurance regulators on the topic,” he said.
He pointed to concerns dating back into the past decade of NAMIC members who said they were asked specific corporate governance questions by regulators during financial and conduct exams. “We’re not trying to blow up incorporation by reference. We think it’s important,” Thesing said. “But we think it should cycle back to its originally intended purpose, and that was to allow regulators to advance technical changes in a swift and efficient manner.”
NCOIL Chief Executive Officer Tom Considine said a Florida law in which all items incorporated by reference are exposed under the state Administrative Procedure Act for legislative review by the legislative Joint Administrative Procedures Committee might be a usable solution. “We’d like to get it resolved,” he said.
State regulators have been cool to the idea of state lawmaker oversight of such changes. Last fall, the NAIC’s governance review task force rejected a request by insurance industry groups that would have allowed state lawmakers or other third parties to review the updates to NAIC policies. California Insurance Commissioner Dave Jones said during the task force meeting that legislators already have the power of third-party review via the ability to draft legislation (Best’s News Service, Dec. 13, 2016).
On July 15, the NCOIL Business Planning and Executive Committee will consider a resolution designed to help state insurance departments get financing that would keep lawmakers and regulators more informed about insurance regulation at the NAIC and NCOIL.
The model act would amend state insurance codes to require that insurance budgets ensure that both the NAIC and NCOIL would be properly supported “to ensure that insurance public policymakers are properly educated on the issues before them.” State insurance departments would annually seek in their budget requests funding for NAIC member assessments as well as funding for memberships, travel and other expenses necessary for the chairman and ranking members of the House and Senate insurance committees of jurisdiction to fully participate at NCOIL meetings.
(By Thomas Harman, Washington Bureau manager, BestWeek: Tom.Harman@ambest.com)
