The American Insurance Association is urging state insurance regulators to change what is describes as their chaotic and costly approach of individual states issuing investigative subpoenas whenever an insurer comes under scrutiny – a serious problem which is worsening.
“While state insurance regulators have legal authority to obtain necessary information in their investigations, we do not believe it is necessary or desirable for the states to essentially tackle these issues on a fragmented, inconsistent basis,” wrote Craig Berrington, AIA senior vice president and general counsel, in a May 31 letter to Diane Koken, president of the National Association of Insurance Commissioners.
Berrington suggested a better and more effective approach in his letter: authorize the regulator of the state where the insurer is domesticated to be the lead state. “Where multiple jurisdictions are involved because of the insurance company’s domiciliary structure, those jurisdictions should establish a lead state based on the facts of the individual case and the expertise in the affected states,” Berrington wrote. “The concept is already used successfully in other areas of regulation.”
Current procedures waste time, are needlessly expensive, and inconsistent with the NAIC’s quest for uniform state regulation, stated Berrington. “We request that the NAIC take the initiative and act on a solution quickly, for the benefit of the public, regulators and insurers.”