The National Association of Insurance Commissioner’s proudest moment was during its response to 9-11, when it was able to asses the impact of the terrorism within a few days, Dr. Therese M. “Terri” B. Vaughn told Glen Pomeroy, moderator of the May 6 regulatory issues panel at NCCI Holdings Inc.’s Annual Issues Symposium 2005 in Orlando, Fla.
Pomeroy, vice president and associate general counsel of Governmental/Regulatory Affairs, GE Insurance Relations and a former North Dakota Insurance Commissioner, moderated the panel which included James “Mike” Pickens, a partner in Friday, Elderidge and Clark, and Arkansas Insurance Commissioner for two terms; George Nichols III, senior vice president and profit center head, New York Life Insurance Co.’s AARP Tampa office and a former Kentucky Insurance Commissioner; and Vaughn, Robb B. Kelley Distinguished Professor of Insurance and Actuarial Science, Drake University, and former Iowa Insurance Commissioner and chairman of the NAIC terrorism risk implementation working group.
Vaughn actively supports NAIC’s the interstate compact and believes that both large and small states need to support this initiative, which will change the way states deal with various outstanding insurance issues.
“The Terrorism Risk Insurance Act is terribly important, we have to work hard to make sure it gets passed,” Vaughn said.
Pickens said Congress feels the states aren’t moving fast enough they know what to do but not how to do it.
Nichols agreed, saying that if states interact with Congress they will take the pressure off and state legislators can act to regulate the industry. He suggested one way to accomplish this was for a state compact to be approved.
“Regulators jobs are to make sure rates aren’t excessive,” Pickens said. He suggested a flex-rate system in which rates could be from 1 to 10 percent, saying that would de-politicize state insurance regulation. He felt both insurance companies and consumers are hurt by over-regulation.
Vaughn maintains that if the insurance market is left on its own and is competitive insurance prices will reach their own levels. “With regulation if policy rates are too low, companies can’t afford to stay in the market and they withdraw,” she explained. “If they are too high consumers can’t afford to pay their policies.”
The panelists discussed NCCI activities and agreed that patience is running thin about provisions of the State Modernization and Regulatory Transparency Act and when it will be implemented. Pickens said that officials feel compelled to introduce SMART legislation just to get everyone’s attention.
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