NAIC Delays Vote On Compact Draft For Life Product Approvals

Those, and other issues, have prompted a wide range of support and non-support among commissioners.

Regulators in states like New York say that they support the compact.

But commissioners' doubts over the compact are also surfacing as witnessed recently when the NAIC's zone of Western states unanimously expressed concern over points in the draft including preemption of authority of state courts and state laws.

Montana Insurance Commissioner John Morrison says "a substantial number of consumer protection laws are in place and legislative and legal battles have been fought to put them in place." Those gains would be lost, he adds.

However, he adds, the idea of a compact with a single point of filing has promise, particularly if it eliminates desk drawer rules–those rules that have developed by practice over the years.

South Carolina Insurance Director Ernst Csiszar says effective product regulation could be achieved by eliminating prior approval product filing in favor of file-and-use filing with a proper audit function and significant sanctions for violations. The market conduct function could be used to examine products, he adds.

In South Carolina, there is a quick product turnaround, he says, and not belonging to a compact would allow the department the flexibility of either adopting what the compact does independently or not complying with it. Politically, he says, South Carolina's participation in a nuclear waste compact "has not been the most wonderful experience for the state."

Among Florida's concerns, says Kevin McCarty, deputy insurance commissioner, is that appropriate management authority be given to large states with strong consumer protections. For instance, he adds, Florida has strong consumer protections for senior citizens that it would not want to diminish. He also questions including long term care insurance in the compact.

McCarty says that the issue of opt-out stays is another important point for Florida. The state department does not have the authority to create emergency rules so it is important that there be adequate time to opt out of a standard if needed, he explains.

Consumer groups also raised concerns over consumer rights in a letter from 26 consumer organizations and all NAIC- funded consumer representatives. The groups include the Consumer Federation of America and Consumers Union, both in Washington. AARP also expressed concern over the compact.

The Association of Trial Lawyers of America, Washington is also weighing in on the issue, stating that the compact is "rife with profound constitutional flaws" and its "assignment of broad powers to a single private agency would violate state constitutional guarantees ensuring the separation of powers."