Change is coming to Washington and to the National Association of Insurance Commissioners, but hopefully it’s change that will protect the status quo when it comes to insurance regulation.
Last spring, the editors at Insurance Journal took it upon ourselves to urge the NAIC, which makes its home in Kansas City, Mo., to make a move, writing:
“It’s time for the group representing the states’ insurance regulatory experts to pack up its bags, computers and name badges — and move to Washington, D.C.”
Our concern was that despite the clout of independent agents as state regulation advocates, powerful insurer and financial services lobbies that favor federal regulation too often seemed to dominate the debate in the nation’s capital. The voice of the states needed to be strengthened.
It turns out our advice was not needed. NAIC leaders had already set in motion events that culminated recently in news that NAIC has hired a new CEO, who will operate out the nation’s capital. Former Iowa Insurance Commissioner Therese M. Vaughan has been named to the job. Since 2005, Vaughan has been an insurance professor at Drake University. Prior to that, she was Iowa insurance commissioner for 10 years. She also served as NAIC president in 2002. Vaughan will become the chief spokeswoman for state regulation of insurance, and by being in Washington, she will be able to connect with federal and state government entities and consumer representatives.
Vaughan also will oversee the launch of the NAIC’s new Center for Insurance Information, which is intended to make the vast NAIC resources more accessible to members of Congress and other federal agencies. This new center could do more than any single person can to advance and protect state regulation. It is being established at the same time that Rep. Paul Kanjorski, D-Pa., is sponsoring H.R. 5840, The Insurance Information Act of 2008, to create an Office of Insurance Information within the Treasury. The bill’s supporters, including the NAIC, believe the legislation would help states share confidential data with the federal government while protecting regulations in international insurance agreements.
There is concern that H.R. 5840 could morph into federal regulation. NAIC said it will oppose that. “Our willingness to work constructively on the targeted issues addressed by this legislation should not be construed as implicit acceptance of federal intervention,” former NAIC President Sandy Praeger has said.
Close to 90 insurance bills were before his committee when he proposed the measure, according to Kanjorski. “Regardless of whether or not the federal government directly regulates insurance, we must educate ourselves on insurance policy and build a knowledge base in the federal government on these matters,” the Democrat said.
Now the NAIC itself will be in a better position to educate Kanjorski and his associates. As we wrote last May, the NAIC is superior to any federal office because its knowledge is derived from real businesses, markets, consumers and experience. In addition to the NAIC informing states about what’s going on in Washington, it will now be able to better educate the entire nation about what’s going on in the states.