|No There There
The NAIC’s record of doing little to nothing remains
intact. Now let’s see what happens when Congress puts
regulators’ feet to the fire.
By Scott Sinder
The NAIC’s spring meeting in March was not, as I had
feared, “Groundhog Day.” This was New York, after
all, and even the state regulators cannot dampen the city’s
energy and excitement. The event itself, however, attended by
more than 1,700 regulators, lobbyists, lawyers and hangers-on,
yielded little discernible progress on issues of importance;
there was no public discussion of TRIA, congressional attempts to
repeal McCarran-Ferguson, or federal regulation of insurance.
The meeting was shorter than usual—three days instead of
four—and according to some attendees seemed to be lacking
focus. With apologies to the late Gertrude Stein, there was
“no there there.”
Nonetheless, it appeared a good time was had by all. More than
a dozen new commissioners attended. Eric Dinallo, the former
general counsel of Willis who was nominated as New York insurance
superintendent by Gov. Eliot Spitzer, offered sightseeing
suggestions for the frugal traveler and, helpfully, outlined a
number of issues that he intends to pursue at the insurance
department. Dinallo’s left coast counterpart, Steve Poizner
of California, was also there. Poizner will host the regulators
at their June meeting in San Francisco.
Some of the other new commissioners attending were:
- Marci Morrison (Colo.), a former state legislator and mayor
who was consumer representative to the NAIC.
- William Deal (Idaho), an insurance agent and former state
- Nonnie Burns (Mass.), a former Massachusetts Superior Court
- Doug Ommen (Mo.), former deputy commissioner and general
counsel of the Missouri department.
- Mary Jo Hudson (Ohio), a lawyer who worked at the Ohio
insurance department and as general counsel of the Office of
the Ohio Insurance Liquidator.
- Scott Richardson (S.C.), a former state legislator and
- Leslie Newman (Tenn.), a lawyer who has served in both
public and private practice.
- Paulette Thabault (Vt.), a lawyer and nurse who was deputy
commissioner of the Vermont Health Care Administration.
- Sean Dilweg (Wisconsin), who has served for several years
as a close advisor to Gov. Jim Doyle.
The New York meeting was the swansong for outgoing
Pennsylvania Commissioner Diane Koken, who is returning to the
private sector after having served as NAIC president, chair of
the Interstate Life Insurance Compact Commission and chair of the
NIPR board. Replacing her on the NIPR Board is Roger Sevigny, the
New Hampshire insurance commissioner and NAIC vice president.
Julie McPeak, director of the Kentucky insurance department, was
also installed on the NIPR Board. (Attorney John Fielding serves
on the NIPR Board on behalf of the Council.)
Despite the relative inaction (fittingly, the commissioners
attended a showing of the Broadway hit “The Drowsy
Chaperone”), there was some activity on issues important to
Council members, particularly in the area of surplus lines. At
the Producer Licensing Working Group, commissioners opened
consideration of a draft interstate compact that would make
uniform the surplus lines requirements of states participating in
the compact. The proposed compact and the proposed federal
surplus lines legislation take differing approaches:
- The federal bill provides for a single point of payment for
surplus lines premium taxes. The compact would make the tax
allocation system work better, but would still require multiple
payments to multiple states.
- The federal bill streamlines some surplus lines regulatory
requirements—such as the sophisticated policyholder
exemption—but defers, for the most part, to the home
state of the insured, which is given regulatory authority over
surplus lines transactions. The compact, by contrast, seeks to
make all state surplus lines laws and regulations
uniform. Thus, all declination requirements, white lists,
filing rules and other requirements would be the same from
state to state.
Although the two do not mesh perfectly, it is very early in
the process for the compact. The draft is a start and likely to
be revised extensively as it makes its way through the NAIC
process. The Council’s top legislative priority this year
is passage of the federal surplus lines reform legislation, which
would remit surplus lines premium taxes to the state of the
policyholder’s corporate treasury. For The Council,
that is good enough. But once the federal legislation is passed,
state regulators will need to find a way to make the new premium
tax system work. If the compact can provide a format for that
interstate cooperation, that’s fine with us.
Although this was a relatively slow start for the regulators,
I expect action to pick up as the year progresses and Congress
turns up the heat. Nothing gets the regulators to
“dance” like putting their feet to the fire.
Sinder is CIAB general counsel.