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Accepting The Challenge: Redefining State Regulation Now

PREFACE

There will never be a better time than now to redefine state insurance regulation through more uniform insurance regulatory procedures and greater consistency of state standards. A critical mass of activity and opinion is pushing the industry in this direction:

  • The eyes of the industry are locked on efforts to pre-empt imposition of federal regulation of producer licensing.
  • The NAIC has entered into a Statement of Intent, a voluntary agreement among commissioners on a core set of principles and values built around uniformity to govern state insurance regulation. Nine new, commissioner-driven Working Groups have been formed to achieve the goals of the NAIC.
  • The National Governors Association report entitled "Governance in the New Economy" observes that "the higher the cost to industry of fifty different state regulatory systems and the more the issue is interstate, the more the responsibility (for creating regulations) begins to tip toward federal standard-setting."
  • The U.S. House of Representatives has discussed the possibility of conducting a series of hearings on the subject of uniformity this year.
  • Proposals being advanced by the banking community advocate a more centralized system of insurance regulation.

Industry's call for uniformity is not new, nor is NAMIC's involvement. In 1993, the NAMIC Global Regulation of Insurance Proposal (GRIP) Task Force identified competitiveness, accountability, solvency and guaranty fund reform as priority concerns to assure the continued health of the industry. 

NAIC President George Nichols III said it best not long ago when he implored industry to "get your act together" and say "what level of uniformity" we really want. With this report, NAMIC formally accepts.  We are prepared to seize this opportunity to aggressively seek more uniform insurance standards.

NAMIC enters this important debate with the intent of helping move it forward to a positive conclusion. The insurance segment of the financial services industry doesn't have enough time for business as usual. Simply studying these issues as some are wont to do would be the equivalent of fiddling while Rome burns. "Accepting the Challenge: Redefining State Regulation Now," is our contribution to the ongoing process. It is intended to serve as a specifically drawn plan of action to actually implement reforms in state regulatory procedures, without which state regulation will likely become a memory.

We look forward to working with our colleagues in industry along with regulators and state policymakers to achieve these goals.

Roger H. Schmelzer, Vice President Regulatory Affairs
National Association of Mutual Insurance Companies
Indianapolis, Ind.
April, 2000