ACLI: Compact First Step On Road To Reform

May 31, 2006 at 04:07 PM

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The American Council of Life Insurers wants to talk about how the National Association of Insurance Commissioners is going to implement the new insurance regulation compact.

The ACLI, Washington, is preparing to make the Interstate Insurance Product Regulation Compact a topic of conversation at the upcoming NAIC summer meeting.

The NAIC, Kansas City, Mo., has been working for years to set up the interstate compact. Organizers needed the official support of 27 states to bring the compact to life.

Ohio recently flipped the switch by becoming the 27th state to decide to join the compact.

The compact is "a huge step forward" and "we are completely supportive of these efforts," says Michael Lovendusky, an associate general counsel at the ACLI.

But the compact is simply one element of regulatory modernization, not the answer to all questions, Lovendusky says.

The compact does not address issues such as international representation of the insurance industry, and it does not address issues such as solvency or market conduct initiatives, Lovendusky says.

The prospect of a bill creating a federal insurance company regulatory system advancing in Congress probably was the reason that states enacted the compact so quickly, Lovendusky says.

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