Insurance Legislators Are Talking About States' Rights

Legislators with an interest in insurance and financial services are wondering what more they can do to defend their states' financial services rules from federal agencies.

State lawmakers have included a number of states' rights measures on the agenda for the National Council of Insurance Legislators' 2018 annual meeting.

NCOIL members began the four-day meeting today in Oklahoma City.

The members are meeting as the Nov. 6 general election results have given control of the U.S. House to Democrats, and given Democrats control over the House, the Senate, the governorship or some combination of those entities in some states that had been dominated completely by Republicans.

Political analysts had been predicting before the elections took place that an increase in dysfunction in Washington could give state-level policymakers more clout.

The NCOIL Agenda

Many of this week's NCOIL sessions deal with federal agency efforts to bend or ignore federal laws and traditions that are supposed to leave regulation of the business of insurance, and some other matters, in the hands of states.

Under federal law, for example, the McCarran-Ferguson Act of 1945 is supposed to give states authority over insurance.

The Employee Retirement Income Security Act of 1974 (ERISA) gives the federal government the authority to preempt state benefits rules.

The Dodd-Frank Financial Services Reform and Modernization Act of 2010 gives federal agencies' new financial services regulation responsibilities.

NCOIL has scheduled a session with the title, "Reverse Preemption: Can States Preempt Federal Insurance Laws and Regulations Through Use of the McCarran-Ferguson Act," and a health session with the title "Examining the Role of ERISA in the State Based System of Insurance Regulation: Can Meaningful State Reforms be Achieved in an ERISA-Dominated Marketplace?"

Louisiana state Sen. Dan Morrish has introduced a resolution calling for NCOIL to use McCarran-Ferguson to fight off Federal Reserve Board efforts to regulate insurance holding companies. Morrish wants NCOIL to ask the Federal Reserve Board to rely on the work of state insurance regulators to the fullest extent possible, and not to duplicate or conflict with states' efforts to regulate insurers' market conduct and solvency.

The Minutes

In a meeting document packet, NCOIL has included draft minutes from a number of sessions held at NCOIL's summer national meeting, in Salt Lake City.

The minutes drafters note that Massachusetts regulators have raised another question about states' rights: Whether, when a financial services company has incorporated a federal rule in its own internal policies, and the federal government is not enforcing the rule, a state can enforce the rule itself.

Elsewhere, the draft minutes record comments made during an NCOIL summer meeting session that featured state insurance regulators. The participants noted that federal regulators had a chance to preempt state regulation of any association health plans formed under the new Trump administration AHP regulations but chose not to preempt state regulation of AHPs.