A news item came in yesterday from the Interstate Insurance Product Regulation Commission announcing that New Jersey had officially joined the Interstate Insurance Compact with a swift stroke of Governor Chris Christie's pen. This makes the Garden State the 38th jurisdiction to join the Compact, a group meant to streamline product filing standards for insurers operating within Compact states. With the inclusion of New Jersey, the Compact now represents just over two thirds of the nationwide premium volume for asset-based insurance products.
The Compact purports to bring the best of both worlds to consumers and insurers alike. By upholding a mutually agreed-to set of best practices, Compact states are becoming part of a de facto national standard of care for asset-based insurance products, which is good for consumers. It is also good for insurers, since the Compact is supposed to be, in its own words, a clearinghouse for prompt review of product filings. It preserves the states' sovereignty in regulating their own insurance markets, and yet is a national solution, as it covers the majority of the country.
At present, California, Connecticut, Delaware and the District of Columbia are all notable exceptions to the Compact. So are Alabama, Arkansas, Arizona, Nevada, Oregon, Montana, North Dakota, South Dakota. The inclusion of both New York and Florida is pending. Illinois is in the Compact, but it's asking for time to comply with its standards. Personally, I'd like to know what's holding up California. One wonders if it's simply dropping the ball here or if it decided it handles things just fine on its own and is giving the Compact the cold shoulder. California is one of the few states that could do such a thing.
On a variety of fronts, there is much to cheer with the inclusion of Jersey into the Compact, since anything that improves product filing is bound to help the industry, which often is unable to bring products to market quite as quickly as it would like to. And for the proponents of state-based insurance regulation, this is yet another piece of evidence to show how the states get it right; on their own and without a guiding hand from Washington, the various jurisdictions are slowly aggregating into a single operating standard that, the more it homogenizes, the better it serves the entire industry.
And yet. The governance of the IIPRC is heavily weighted in favor of the premium volume of the states themselves, so it's hardly a truly representative form of government. According to the IIPRC's website, the group is run by its Management Committee, which is comprised of the six largest Compacting States by premium volume (Illinois, Michigan, North Carolina, Ohio, Pennsylvania and Texas). It also includes four mid-sized states (Maryland Missouri, Virginia and Wisconsin) as well as one state each from the IIPRC's four regional zones (Kansas, Mississippi, New Hampshire and Washington).
