On May 15, I posted a blog entry featuring my comrade-in-arms--Steve Piontek, Editor In Chief of NU's Life & Health Insurance edition--talking about the recent challenge by state lawmakers in NCOIL to the NAIC's accreditation program and its habit of closing some of its deliberations to the public. That blog received absolutely no comment on the subject--not even an anonymous one (which is an option, by the way.) I was amazed! Could it be that you folks are simply playing CYA, afraid to anger the beast who governs your working lives?
In any case, Steve published a second column this week about another NAIC scandal--the admission by one commissioner (John Oxendine of Georgia) that he had voted for some previous model acts as a favor to his fellow state regulators, without any intention of seeking its passage in his own legislature. That's was just wrong, and it's good to know that new NAIC rules require a regulator who votes in favor of a model act to support it in their home state.
(You may see the entire news story that sparked this controversy by clicking here.)
Steve seized the opportunity to fulminate some more about how the NAIC does business, as well as to challenge the need for the state regulator association, period. (Steve's full column may be accessed by clicking here.)
I myself have been a backer, for the most part, of state regulation--certainly not because it's been done well, but because I have no confidence the federal government (especially the current administration, which has taken incompetence to an art form) could ever do it any better. Indeed, they might do a much worse job of protecting the consumer's interest.
However, I have never been a fan of the byzantine structure set up by the NAIC to establish some semblance of national order over the diverse, often conflicting and always expensive state regulatory system. Entire generations seem to pass before a model bill does. It certainly isn't difficult to pick out the NAIC's flaws. What's hard is figuring out how best to improve the Rube Goldberg-like system we have in place.
If anyone has the courage to respond (even anonymously), please speak up! Is the NAIC salvageable, or should we scrap the whole system in favor of an optional federal charter?
For those OFC-backers out there, what makes you think Uncle Sam will do any better of a job than all his nephews in state government? And what if you're wrong? At least with state regulation, only one state can get screwed up at a time. If the Feds mess up on insurance oversight, it's going to be one huge mess we may never get out of.
But if we do keep state regulation intact, how can we make it work more effectively and with less cost? Solomon himself might have a hard time with that one.
I'm eager to hear your take on all this!
Comments (1)
Perhaps the reason that there were no replies to this column was that we were all on vacation. (I am kidding, of course!)
There may be no clean answer to this dilemma. We have the devil we know (NAIC) versus the devil we don't know (the Federal Government).
To say that the Bush Administration has brought incompetence to an art form is to give them too much credit. Our new Congress has not done much better.
Over 67 percent of the American public wants us out of Iraq, yet Congress cannot accomplish this task. When you cannot do the will of the people with two thirds backing, how will you ever do what is right on a subject where fully two-thirds do not understand it? (I am, of course, referring to insurance and an optional federal charter.)
There appears to be no clean answer. Perhaps we need a hybrid solution where we blend state regulation with a Federal charter spelling out guidelines with certain absolutes.
The OFC could set certain rules that must be established in all states, while leaving some options for the state under these rules. This type of legislation would have to be drafted very carefully.
Posted by Craig Dolan | May 31, 2007 8:18 AM
Posted on May 31, 2007 08:18