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Use Oxley-Baker Road Map to Improve State Insurance Regulation

ANCHORAGE, ALASKA (Sept. 11, 2004)--The National Association of Mutual Insurance Companies (NAMIC) urged the NAIC Industry Liaison Committee to use the Oxley-Baker road map to cure what ails state insurance regulation during the regulators' Fall National Meeting here today. One of the committee's topics was the "State Modernization and Regulatory Transparency Act" (S.M.A.R.T. Act) Discussion Draft.

"Congressmen Oxley and Baker have done this industry and the NAIC a tremendous service by outlining a path for reform for state insurance regulation," Peter Bisbecos, NAMIC Director of Legal and Regulatory Affairs told commissioners. "NAMIC generally agrees with the identified reforms and strongly suggests that the individual members of the NAIC focus their time on helping their respective state legislators understand the complex issues involved and to persuade them to enact reforms in areas identified in the SMART Act."

Bisbecos said that the draft Act's substantive reforms "correspond with NAMIC's long-held belief that state insurance regulation can best be accomplished in the state capitols," and credited Congressmen Oxley and Baker with recognizing and addressing "the key barriers to reform that have kept the insurance industry mired in an outdated command and control style regulatory regime."

Chief among these, according to Bisbecos is price regulation, one of the more controversial aspects of the SMART Act as drafted. "Time has shown that regulators, despite their best efforts and good intentions, have not found the proper regulatory balance that can be achieved by a more competitive market. Illinois' three decades of success in providing its residents with competitive prices has proven this point," Bisbecos asserted.

Bisbecos also commented favorably on the SMART Act's call for more coordinated, "for cause" market conduct examinations, although he noted that there were some differences between the Act's provisions and the NCOIL model law that are important to his member companies.

Sounding a cautionary tone, Bisbecos said that while the SMART Act would maintain and improve the state-based foundation of insurance regulation if enacted in its present form the initiative would not be "the final word on insurance regulation from Washington."

"Despite the best of intentions, federal programs and regulation have a tendency to expand. Pursuit of any federal solution to the problems of state regulation will inevitably invite additional mandates that could serve to undermine the principles of risk sharing on which this industry is based," Bisbecos asserted, challenging the NAIC to join with the NCSL and NCOIL to enact provisions contained in the SMART legislation as a way to forestall federal legislation applied to property/casualty insurance.

"Now is the time to show the effectiveness of that coalition," Bisbecos said. "If it is not demonstrated, it is certain the "next" federal proposal coming out of Washington, D.C. will not go to the lengths that Congressmen Oxley and Baker have gone to preserve the present state framework."

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For further information contact:
Robert Detlefsen at rdetlefsen@namic.org
or (317) 875-5250