Somewhere between the time I wrote March 22 piece on the National Association of Insurance Commissioners, the group of state insurance regulators, (NAIC) and the time it was posted, the NAIC resolved one of the issues I raised: its identity.
You will recall that I discussed how the NAIC represented itself as a trade association at times and as an insurance regulator at times. For me, the discussion arose in the context of open meetings and transparency.
For Rep. Ed Royce of California, it arose in the context of, as he put it, “Advancing positive regulatory reform to effect better insurance regulation for consumers.” Congressman Royce wrote a letter to the organization on February 28 because he was confused by what he saw as conflicting stances by the NAIC. For example, he found a letter from former NAIC president Walter Bell that said, “The NAIC is a 501(c)(3) non-profit corporation. … As such, the NAIC is not subject to state Open Meetings or ‘Sunshine’ Laws. … When individual insurance commissioners gather as members of the NAIC, they are not considered a governmental or public body … but rather are a private group. As an organization, the NAIC does not have regulatory authority.”
What confused Royce further was a press report that the NAIC was engaged in an “initiative to brand itself as a ‘standard-setting organization’ rather than a trade group.” So Royce wanted to know, “What is NAIC’s status? Is it a trade association? Is it a formal part of ‘the national system of state-based insurance regulation in the U.S.’” Royce later said he was interested in getting his questions answered since, “It appears, when it suits its purposes, the NAIC fends off questions about its accountability and transparency by arguing that it is ‘a private group’ that ‘does not have any regulatory authority.’”
Congressman Royce was asking the questions that the rest of us have been asking for years. The difference was that he assumed he was in a position to get a straight answer. Did he get one?
What he was told by NAIC President and Florida Insurance Commissioner Kevin McCarty was that the NAIC was not a trade association because a trade association is “made up of businesses or business people in a common field and is designed to assist its members and its industry in dealing with mutual business problems. The NAIC is an association of elected and appointed state regulatory officials charged with regulating the insurance industry under state law.”
On that point, then, it appears that if your business is regulating the insurance industry, it is not a business. Therefore, the NAIC cannot be a trade association. Okay.
Then McCarty said that the NAIC “does not have regulatory authority.” So far, so good. But, he said, that its members are “individuals that do have such authority and the NAIC provides a forum and vehicle for its membership to develop standards and collectively set regulatory policy including serving as its members’ collective voice, crafting models [sic] laws and guidelines, coordinating examinations, and consulting each other regarding regulatory actions.”
So now the distinction between a trade association and the NAIC is that instead of being “business people in a common field” and an organization “designed to assist its members and its industry in dealing with mutual business problems,” it is composed of regulators in a common field assisting each other in dealing with common regulatory problems.
If you are still confused, you might wonder how Rep. Royce fared. We do not know for certain. We do know that he said he still has a disagreement with the NAIC on its assertion that it is not a regulatory authority. And while he had an opportunity to tell everyone during a March 21 address at a financial conference, he used it instead to describe state regulation as “not a world class regulatory structure.”
The NAIC has now cleared up its identity crisis for itself. As for the rest of us, we now know it is not a trade association and it is not a regulator. Just exactly what it is, we may never know.
If we know what the NAIC is not, does that help with what it is? via IFAwebnews.com .