NAIC Panel Blocks Capital Proposal

Oklahoma Insurance Commissioner Kim Holland said that there is a process at the NAIC to advance these issues and that they would not be lost.

Commissioners who are not on the NAIC's executive committee and did not vote also weighed in on the proposal.

Mila Kofman, Maine insurance superintendent, said she was encouraged by the vote "to reject a push by some in the industry to weaken financial protections that are in place to guard against insurance company insolvency – protections that protect insured consumers."

The current financial crisis "is precisely why now, more than ever, we need realistic and credible financial evaluations to guide us through these troubled times and preserve the confidence of the public," Kofman said.

New York Insurance Superintendent Eric Dinallo said the ACLI brought before commissioners "the concept of emergency capital relief, but they couldn't even use the word 'need'."

Dinallo said he was surprised that the ACLI would want to advance the proposal, because the industry has come out relatively well in the current financial crisis due to solvency requirements.

Utah Commissoiner Kent Michie said he believed there had not been enough evidence that an emergency exists, but that the "national economic and financial emergency" could affect insurers' investments in instruments such as commercial paper. He said state insurance regulators should be willing to work with the ACLI to help make Congress aware that there is a need for life insurers to have better and lower-cost access to capital.

Over the past few weeks, a number of parties — including consumer groups such as the Consumer Federation of America, Washington, and the Center for Economic Justice, Austin, Texas; state insurance legislators; and Unite Here, Washington, a labor union — have urged regulators to oppose the ACLI proposal.

"State regulators today showed they can be independent of the industry they regulate," CEF Executive Director Birny Birnbaum said. "This is a good day for state insurance regulation."

Robert Hunter, the CFA's insurance director, said some of the points in the proposal may have value, but he said suporters had not proved that there was an emergency, and he said regulators had not been able to say how the proposal would affect companies.

New York state Sen. James Seward, R-Oneonta, N.Y., president of the National Conference of Insurance Legislators, Troy, N.Y., said members of the NAIC executive today had the "wisdom to slow down the process and not move forward at this time."

The executive committee decision will allow for a "much fuller vetting of all of the issues through a formal process, not an expedited one," and it will allow state insurance legislators to become involved in the process, Seward said.