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NAMIC Official Notes Changes, Opportunities in Direction of Insurance Public Policy

SCOTTSDALE, ARIZ. (Oct. 4, 2004)--A senior official of the National Association of Mutual Insurance Companies (NAMIC) told a group of state financial service regulators meeting here Friday that while the policy direction of insurance regulation is changing, state insurance regulators and legislators should pay attention to what congress is saying about reforms and "coalesce around an agenda of fundamental change."

Speaking on a panel at the annual meeting of the National Association of Securities Administrators Association (NASAA), NAMIC Senior Vice President for State and Regulatory Affairs, Roger H. Schmelzer cited two "underreported" major trends in insurance public policy.

"There is an emerging consensus that insurance regulation should not impede marketplace competition," Schmelzer said, pointing to legislative action in numerous states over the past several years to liberalize rate-making laws. "States such as New Jersey and Louisiana have watched their markets shrink and have actually done something about it. Congressmen Oxley and Baker have even recognized open rating competition in their initial draft of the S.M.A.R.T. bill."

Schmelzer also asserted "a subtle shift of power" from regulators to state legislators with respect to where insurance public policy originates. "Legislators now embrace the reality that they set public policy in their states and insurance regulators administer it," he said, noting efforts of the National Conference of Insurance Legislators (NCOIL) to create model legislation on commercial and personal lines rate modernization, portions of which are now law in 24 states as well as a recently approved market conduct model that has been endorsed by the National Association of Insurance Commissioners (NAIC).

Perhaps most importantly according to Schmelzer, was the work of NCOIL to approve model legislation on credit-based insurance scoring. The NCOIL model is now law in 24 states. While not commonly thought of as reform, Schmelzer said it "is tangible evidence that states are taking responsibility for their regulatory environments. This is what they need to be doing and not a moment too soon."

Schmelzer said that while NAMIC favors a reformed version of state regulation, it has been supportive of the efforts of U.S. House Financial Services Committee Chairman Mike Oxley, R-Ohio, and Congressman Richard Baker, R-La., exactly because their S.M.A.R.T. Act reflects that objective and because of its open competition provision.

Release of S.M.A.R.T. in draft form "has done regulators and legislators a tremendous service by outlining an agenda for reform," according to Schmelzer.

"When Chairman Oxley called it a 'roadmap,' he wasn't exaggerating," Schmelzer said. "He's identified the right concerns at the right time. There could be no clearer path to follow."

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