The new CEO of the National Association of Insurance Commissioners (NAIC) says there is a limited role for the federal government in insurance in partnership with state regulators but there is “no need for dual regulation.”
Ben Nelson, former U.S. senator from Nebraska and a former two-term governor and insurance commissioner in his state, presented himself as a staunch advocate for state insurance regulation and promised to work at improving the state-based system rather than weakening or replacing it on a conference call today, one day after his appointment was announced.
Nelson said he will respect the two-year “cooling off” period restricting former senators and federal employees in their contacts with government officials. He said he will not be doing lobbying; instead staff members will handle that.
The NAIC represents appointed and elected insurance regulators in all states, the District of Columbia and territories.
Citing coordination between federal and state officials in the wake of Superstorm Sandy as an example, Nelson said he believed state regulators should form a partnership with federal and even international officials but that state regulation itself should be preserved. He said any partnerships must recognize the “importance and value of state regulation.”
He said the NAIC’s focus will be on “how we make the insurance industry responsive to the needs back home” in the states.
He said NAIC will soon be issuing a report on recommended improvements to state regulation.
There are some segments within the insurance industry and consumer circles that support giving insurers a choice of federal over state regulation, arguing that state-based regulation is not effective or efficient in dealing with large national and global insurers and issues.
The Dodd-Frank Wall Street Reform Act created the Federal Insurance Office (FIO) within the Treasury but Nelson said the law does not give a regulatory role to the FIO or to the federal government and, he said, “nor should there be a regulatory role” for the federal government.
NAIC President-Elect Adam Hamm, who is North Dakota insurance commissioner, hailed Nelson as the right person for the NAIC’s top staff job, saying he has the “perfect resume” for the CEO position.
Nelson said he had been in discussion with other associations before agreeing to the NAIC position, for which he has signed a two-year contract with an annual base salary of $950,000. He said the salary is competitive with similar association jobs on Capitol Hill.
That salary may be for part-time work. Financial information firm SNL reported on Wednesday that Nelson may be splitting his time between the NAIC and a Washington public affiarss firm, Agenda, for which he serves as policy expert.
SNL also reported that Nelson’s campaign coffers and personal investments have been heavily oriented toward insurance and financial services. The insurance industry supplied Nelson’s Senate campaign with $1.6 million in donations between 2000 and 2012. His personal assets have included investments in Berkshire Hathaway, Genworth Financial and American International Group, according to SNL.
The move is a return to the NAIC for Nelson, who served as executive vice president and chief of staff for the NAIC from 1982 to 1985.
Why would he return to the NAIC?
“Times have changed…issues have changed,” he said, citing in particular the growing interest of federal and international officials in insurance regulation.
Nelson replaces NAIC Acting CEO Andrew Beal, who stepped into the role after former CEO Dr. Therese M. Vaughan left the association in November. Beal now returns to his roles as chief operating officer and chief legal counsel.