Insurers, Consumer Groups React To Compact Draft

Bob Hunter, a consumer advocate representing the Consumer Federation of America, Washington, asked regulators why they think the product filing compact will hold together when other compacts haven't worked.

Hunter's question "goes to the heart of the political challenge of getting this done in the states," says NAIC President Terri Vaughan.

Although the NAIC has not yet polled the states, states showed strong support for developing a compact draft at the NAIC's spring meeting, Vaughan notes.

Birny Birnbaum, executive director with the Center for Economic Justice, Austin, Texas, says compact standards need to be examined to ensure that they adequately protect consumers.

Birnbaum also stresses the importance of establishing an interstate consumer advocate, because the new, centralized system would replace existing state filing processes. Failure to include an interstate consumer advocate provision would be a deal breaker for consumer advocates, he says.

Birnbaum adds that the NAIC will have to include protections to prevent creating a "revolving door." Otherwise, he says, members of the compact's commission or managing committee will take jobs in the industry or go to work for consumer organizations.

The point was also raised that creating the compact might require congressional action. Previously, NAIC officials said they believed no congressional action would be needed.

Some now say congressional action might be necessary to ensure that any disputes between compact states end up in a federal court, rather in a state court in one of the states involved in the dispute.