Do Me A Favor

So there I was, editing a story by Matt Brady on the recent spring conference of the Life Insurance Settlement Association, when I came to something that really threw me for a loop.

And what was it that startled me out of my editorial trance? It was the statement by Georgia Insurance Commissioner John Oxendine that he had voted for some previous National Association of Insurance Commissioners model acts as a favor to other commissioners and with no intent of pressing for their passage in the Georgia legislature.

Call me Candide, but I have a hard time getting my head around this concept of doing a favor when it comes to state regulators and their activities in creating model acts and regulations.

I understand, of course, that this kind of horse-trading goes on all the time in the House, the Senate and the various legislative chambers in states all around the country. It is in some ways, and not all to the good, the very lifeblood or currency of the legislative process.

But somehow in my naivet?, I guess I had always held state insurance commissioners to a higher standard of intent. It's not, after all, as if the NAIC is actually passing a law that is going to automatically be implemented as it would be if a state legislature passed it.

No, the NAIC is engaged in the business of crafting models or templates, if you will, that are supposed to have a universal applicability for the 50 or so jurisdictions it comprises (or so I always assumed was the case). Something called the general good.

Why, I find myself asking, would one commissioner need to vote for a model act as a favor to another commissioner? If the issue were such a pet project for the commissioner seeking the yea vote, wouldn't his or her energy be better spent trying to obtain passage of legislation regarding that issue in his or her own state legislature?

What makes Oxendine's statement particularly irritating is his admission that he voted for models that he never intended to push for.

It's impossible to believe that Oxendine is the only commissioner to have done this. So what is going on here?

Is the NAIC engaged in some kind of game or ego trip? Does the passage of models give it some kind of validation as an organization?

We already know the sorry takeup rate of the 35 models passed since 1996: A dismal 3 were adopted uniformly by a majority of the states.

When you consider the amount of time and energy that has been spent noodling over some of these models, the amount of heartburn some of them have caused the industry, and the increasingly imperial arbitrariness of the NAIC in deciding what issues should be subject to model legislation, then it is truly astounding that a commissioner could so blithely vote for one as a favor to another.

This is no Claude Rains moment, folks. I feel a sense of palpable outrage over what has sometimes seemed like a circus put on by our regulatory solons–and for what? So a particular commissioner could have a victory in having a pet project adopted by the association?

It is high time that some authority make the NAIC toe the line. Just as it is high time that some authority make the organization define once and for all what its purpose is. Congress, are you listening?

As far as I'm concerned, this is just one more example of why the NAIC has forfeited the respect of many observers.

It's one more example that forces me to pose the question: What do we need this organization for?

Steve Piontek

Editor-in-Chief