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States won’t relinquish their individual insurance laws and
consumer protections without a fight from the National Conference of Insurance
Legislators (NCOIL).
Through letters, NCOIL is urging state governors and
attorneys general to engage in a dialogue with federal lawmakers regarding H.R.
5840, the Insurance Information Act of 2008, which would preempt state insurance
laws and consumer protections and pave the way for an optional federal charter.
“As strong advocates of states rights, we transmitted these letters
to caution our state-level government colleagues about this impending federal
threat,” explained Rep. Brian P.
Kennedy (D-R.I.), NCOIL president. “While we have no doubt that the sponsors of
H.R. 5840 have only the best intentions, we continue to assert that the proposal
would infringe on state insurance efforts.”
NCOIL is fighting the Insurance Information Act for two
simple reasons, according to Kennedy: states provide better regulation of the
industry, and it’s what consumers want.
“State statutes and regulations—not federal
intervention—have fostered the vibrant insurance marketplace that exists
today,” he said. “We owe it to our constituents, who have never asked for a
federal insurance regulator, to protect what we have done well, and that is
regulate the insurance market.”
Kennedy added that states will reform their own regulation
when needed, such as in the areas of producer and company licensing, market
conduct, and speed-to-market.
“An Interstate Insurance Product Regulation Compact, which
will soon welcome its 33rd member jurisdiction, shows that states can enact
comprehensive reform—without federal intervention,” he noted.
Kennedy and other state legislators have expressed their
concerns that H.R. 5840 could potentially lead to an optional federal charter,
which, in their opinion, would jeopardize state innovations and establish
duplicate and costly dual regulation. It also would force consumers and
businesses to interpret overlapping and ambiguous laws.
NCOIL officers warn that H.R. 5840 would:
- Preempt state laws that the proposed Office of Insurance
Information (OII) determined as “inconsistent” with new federal international insurance
agreements.
- Diminish the role of state officials, including governors,
attorneys general, legislators, and individual regulators, while expanding the
role of the private National Association of Insurance Commissioners (NAIC).
- Lay the foundation for an “inappropriate federal scheme,”
such as an Office of National Insurance or an optional federal charter. NCOIL
believes that while H.R. 5840 would create an OII to gather data and serve as a
federal “advisor” for international and domestic insurance policy, the powers
of the OII would not be confined to merely those of information gathering, as
the bill is currently written. Because H.R. 5840 is not specific in its scope
and its advisory nature, it paves the way for larger preemptive power despite
the good intentions of its main sponsor, Congressman Paul Kanjorski (D-PA).
In June, NCOIL leaders wrote to state insurance regulators
to ask them if they, as individual regulators, shared the NAIC stance, which is
“conditional support” for H.R. 5840. The letter strongly urged commissioners to
stand up for the state-based system and oppose state preemption.
At its upcoming Summer Meeting, NCOIL will spotlight H.R.
5840 and NAIC’s “conditional support.” The meeting will take place July 10–13
in New York City.
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