Iowas Terri Vaughan: 10 Years A Regulator

Vaughan said the practice of bid-rigging is "just outrageous and any fraudulent act of that nature needs to be punished."

But there needs to be a thoughtful approach to broker compensation so that the guidelines established are balanced.

She called charges that state regulators did not find these problems "pure nonsense" and pointed to the securities industry where problems were undetected by both federal and state regulators.

The regulatory modernization effort going on will make state regulation more efficient, according to Vaughan. It is being driven, she continued, not only by market forces but a world that is increasingly international as witnessed by the work of the International Association of Insurance Supervisors and the International Accounting Standards Board.

On the issue of federal intervention in insurance regulation, Vaughan said the State Modernization and Regulatory Transparency Act draft, known as SMART, has "too much in it to go anywhere." In February 2002, she said, a few commissioners favored going to Congress with a very narrow bill for life products rather than proceeding with the interstate compact. The problem, however, is that "in Congress they have a hard time doing anything narrowly.

"With the politics in Washington, it is hard to limit scope," she says. "My concern is that the last thing we want is to have life standards embedded in federal law."

Vaughan said she is not interested in running for legislative office because "at heart, I am an academic."

She said the fact that she has a 4-month-old son weighed in her decision to leave her position because to do the job of a commissioner right takes a lot of travel. Vaughan also has a 7-year-old son.

After leaving office, she will work on the 9^th edition of a textbook she co-authored with her father, "Fundamentals of Risk and Insurance." The new edition is due out in January 2006.

As the NAIC takes a greater role in speaking for state regulation, she said it is important that there is "greater transparency and accountability than there is in other legislative processes." For instance, she said, "it is really important that the NAIC adhere to its open meetings policy."

Reproduced from National Underwriter Edition, December 16, 2004. Copyright 2004 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.