Different Constituencies Have Their Say On The Interstate Compact Proposal

Regarding a comment made by a commissioner previously about the right of consumers who are not satisfied with a product to "walk with their feet," Bridgeland noted that life insurance is meant to be held for life and "abandoning a policy can have serious consequences."

Van Ellet, a senior legislative representative with AARP, Washington, said the issue of pre-emption was of "critical importance to us."

And, Cathy Steinberg, Georgia consumers insurance advocate, urged a more thorough review, saying, "The last time I sped, I got a ticket."

She said "pre-emption was never well received in a state like Georgia."

Prentiss Cox, an assistant attorney general in Minnesota, also urged that the compact be "more seriously studied" given "its unprecedented nature" and "very troublesome questions" that are being raised.

And Ned Miltenberg, senior counsel with the Center for Constitutional Litigation, Washington, which counts the American Trial Lawyers Association as one of its constituents, raised strong concerns over the compacts constitutionality.

He said the compact draft was "virtually without precedent" and "rife with constitutional flaws."

The potential to limit access to courts as well as the legislative authority the compact would in effect create "primary violations of the separation of powers doctrine," Miltenberg said.

Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas, urged more representation for consumers through a consumer oversight body. Insurers have government relations offices and trade groups to represent them and consumers need representation, he said.

He addressed questions raised over a $600,000 budget proposal for such a consumer body, saying that while it was an initial estimate, it was nothing in comparison to insurers financial resources.

The ACLI finds language granting a stay of compact requirements to states that are in the process of opting out of a product standard acceptable, said Patricia Parachini, ACLI senior director, office of the general counsel. But it has a more general concern that successive compact drafts have made it easier for states to opt out, she added.

Parachini explained that an important feature of the compact is that states would not opt out of the standards, but, rather, would act uniformly.

The compact draft exempts states that are going to opt out of a standard from conforming to that standard while the opt-out process is being implemented.

On the issue of pre-emption, the ACLI believes that courts would retain jurisdiction, Parachini said. Consequently, she said the ACLI was urging that new language listing types of jurisdiction that the courts would continue to have such as causes of action be left out. Rather, she said, language should simply state that the compact would not abrogate or restrict a persons access to the courts.

But Montana Commissioner John Morrison said he has questions regarding whether simply referring to access to courts and cutting out specific examples would be sufficient to preserve state civil remedies.

Reproduced from National Underwriter Life & Health/Financial Services Edition, November 18, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.