Insurers Praise NAIC’s Message to Feds on

June 14, 2002

The National Association of Insurance Commissioners (NAIC) sent a tough message to the Office of the Comptroller of the Currency (OCC) this week during its Functional Regulation Working Group meeting, reiterating that functional insurance regulation is the responsibility of individual states and their insurance commissioners and attempts to usurp that authority will be strongly opposed.

The NAIC filed an amicus brief joining forces with the National Association of Independent Insurers (NAII) in a case involving two other insurance agent trade groups. The OCC issued an opinion letter stating that federal law preempts certain elements of a West Virginia consumer protections’ statute governing insurance sales and solicitation. The opinion letter maintained that these provisions do not apply to national banks. A similar OCC opinion was released pertaining to a suit filed in Massachusetts in 2002.

“Illinois Insurance Director and NAIC Committee Chairman Nat Shapo minced no words in his message to the OCC to back off and leave the regulation of insurance to the states. NAII fully supports his comments and hopes that they are taken seriously,” NAII Senior Director and Counsel Michael G. Koziol, said. An opinion letter issued by the OCC in both West Virginia and Massachusetts “distorts and misrepresents” the “prevent or significantly interfere” standard developed by the Supreme Court in its Barnett Bank decision and is reaffirmed directly in the public policy in the Graham-Leach-Bliley Act (GLB), according to Koziol.

Additionally, NAII’s amicus challenged the ability of a bank regulator to issue a preempting opinion about whether a state law exceeds permissible scope regarding insurance regulatory matters.

“The courts, not the OCC, are the proper forum for the banks to challenge state law,” Koziol said.

The Functional Regulation Working Group also pointed out that Representative Michael Oxley, (R-OH) in a letter to Treasury Secretary O’Neill, hit the nail on the head as to the intent of GLB, and that the OCC went beyond its authority in issuing an opinion claiming to preempt state law regarding the Massachusetts’ provisions.

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