This week’s endorsement of competition to determine insurance pricing by the nation’s largest organization of state legislatures “sends the strongest message yet that states are prepared to take the responsibility for making their insurance regulatory systems more efficient and effective,” according to Roger Schmelzer, vice president of Regulatory Affairs for the National Association of Mutual Insurance Companies (NAMIC).
At its annual meeting in San Francisco, the Executive Committee of the National Conference of State Legislatures (NCSL) approved a “Statement of Principles for the Regulation of Property and Casualty Insurance.” Legislatures in all 50 states are members of the NCSL.
“The Statement of Principles establishes some very critical public policy guidance for state legislatures,” Schmelzer said. “It makes a clear linkage between reform of state insurance regulation and competitive rating while at the same time preserving to regulators the authority to protect consumers.”
Schmelzer also noted that the NCSL principles “strongly assert the power of state legislatures” to demand value-added oversight from regulators rather than a system with unnecessary burdens, delays and costs. “Too frequently, the elected legislators have deferred to the mostly appointed commissioners on fundamental regulatory issues, rather than establishing definitive public policy standards for regulators to implement.”
Schmelzer pointed to legislatures in New Jersey, Louisiana and New Hampshire which all enacted new insurance pricing laws designed to open their markets to competition in 2003, as positive examples of the type of action states should consider in keeping with the NCSL
Statement of Principles.
Adding the NCSL Statement of Principles to 2003 legislative action in individual states on rating issues and insurance scoring as well as the stated intent of the National Conference of Insurance Legislators (NCOIL) to bring a market conduct model bill to the states in 2004 indicates that there is “significant momentum” to reform state insurance regulation, Schmelzer said.
The Statement is the work product of the Task Force to Streamline and Simplify Insurance Regulation established by NCSL in 2001. In addition to the P/C Statement of Principles, the task force produced a model Interstate Insurance Product Regulation Compact designed to provide a more uniform approval process for life, annuity and disability products.