Change comes glacially to the NAIC.
But with the world on the move, change is coming.
Scott Sinder and John Fielding
This conference felt different. But it wasn’t for lack
of trying. The National Association of Insurance Commissioners
meeting in San Diego kept things the same: the large, soulless
hotel seating hundreds of state regulators and lobbyists and
lots—and lots—of meetings on insurance minutiae. As
usual, they cornered each other in hallways discussing
But this time it was different. I noticed an evolution
(nothing moves faster than that) most starkly in the
NAIC’s approach to federal issues and with producer
The NAIC has been increasingly more open to engaging
Congress and contemplating federal involvement in insurance
issues. We saw this in the last Congress, as the regulators
worked with the Council and on the Hill on surplus lines
reform, as well as in their support for the so-called NARAB 2
legislation and their active negotiation on legislation to
create a federal office of insurance information. Regulator
support for surplus lines reform was reiterated in recent
testimony to the Senate Banking Committee.
Equally important, there has been a shift in focus from
Kansas City (the NAIC’s longtime headquarters) to
Washington. The NAIC recently brought on a new CEO, Terri
Vaughan, a former Iowa insurance commissioner and past NAIC
president. Vaughan has moved the executive offices to
Washington, even though the organization cannot register and
lobby Congress. However, the organization’s stepped-up
interaction with Congress, and the integral role of insurance
in financial regulatory reform discussions, make the move to
the nation’s capital particularly well timed.
The hiring of Vaughan also signals a significant move for
the NAIC. In addition to being a former regulator, she is an
academic, with a doctorate in risk and insurance from Wharton.
She will be the NAIC’s primary representative in
Washington, working with Congress and the administration on
insurance policy and legislative matters. I can think of no one
better suited to the job. Vaughan, in her former capacity as
president of the NAIC, worked with the Federal Reserve,
Treasury, the Office of the Comptroller of the Currency and
other agencies. The issues were less pressing, but the
relationships Vaughan developed will serve as a good foundation
for the more difficult discussions currently facing financial
Vaughan will also oversee the creation of the NAIC’s
new “Center for Insurance Information,” which will
be based in Washington. The center, which will be staffed by
“insurance experts” in the various lines of
insurance, has been billed as the NAIC’s effort to make
NAIC and insurance regulatory information and resources more
accessible to federal policymakers and legislators. Presumably,
it is also an effort by the regulators to blunt calls for the
enactment of legislation, such as Rep. Paul Kanjorski’s,
D-Pa., Insurance Information Act of 2008, which would have
created a federal Office of Insurance Information. The NAIC did
not oppose the legislation, but it’s not surprising that
the organization would seek to avoid creation of a federal
The other area of progress is producer licensing. The lack
of uniformity and reciprocity in producer licensing
requirements nationwide remains a significant burden, and I
doubt the NAIC and states will be successful in creating a
seamless interstate system. Ultimately, only federal action can
create a national, uniform licensing system.
Meanwhile, the NAIC has stepped up its efforts and, with the
help of The Council and other producer groups, has had some
success improving compliance with its standards.
The “progress” that most struck me in San Diego
was in tone rather than substance. Prior to 2009, the
NAIC’s producer licensing efforts were led by career
insurance department staffers—a dedicated group of
individuals but sometimes frustratingly caught up in their own
way of doing things. This year, the NAIC reorganized and has
enlisted a number of commissioners to be directly involved in
the discussions and process.
To the uninitiated, this might seem like no big deal, but
the impact was noticeable. Linda Hall, director of the Alaska
Division of Insurance, essentially said this is the
states’ last chance on producer licensing. If they
don’t get uniformity and reciprocity right with this
effort, states would not have another bite at the apple. She
was not booed, hissed or drummed out for her remarks.
Even Oklahoma commissioner Kim Holland strongly urged fellow
regulators to get over parochial interests, take a fresh look
at why producers are licensed in the first place (consumer
protection), and figure out the best way to get there without
being tied to current practices and procedures.
So change appears to be coming. It is a welcome shift from
the traditionally parochial approach of the past. I hope it is
one that will last.
Sinder, a partner at Steptoe & Johnson, is CIAB General
Counsel.Fielding is of counsel at Steptoe & Johnson.