NAIC Holds Its Winter National Meeting in San Francisco

NAIFA Staff Attends to Represent Members’ Interests

The National Association of Insurance Commissioners (NAIC) held its Winter National Meeting in San Francisco, CA on December 5-8, 2009.  Bill Anderson and Ron Panneton represented NAIFA at the meeting where the recurring themes were health care reform, financial services regulatory reform and an interesting session on social networking that focused on the opportunities and challenges to the insurance producer.

Election of Officers:
The NAIC elected its officers for 2010 as follows:

• President: West Virginia Insurance Commissioner Jane Cline
• President-Elect: Iowa Insurance Commissioner Susan Voss
• Vice President: Florida Insurance Commissioner Kevin McCarty
• Secretary-Treasurer: Oklahoma Insurance Commissioner Kim Holland

Suitability in Annuity Transactions Model Regulation:
The Life (A) Committee:

• Received the report of the Suitability in Annuity Sales Working Group,
• Decided to allow interested parties until December 14 to make additional, clarifying, comments on the proposed revisions adopted by the Annuity Sales Working Group,
• Scheduled a December 18 conference call of the A Committee to consider comments from interested parties and take a final vote on the proposal.

It is NAIFA’s hope that the clarifications—which the ACLI intends to submit to the A Committee—will be approved so that enough interested parties can agree on the proposal to insure uniform adoption of the Model when the states consider it in coming years.

Annuity Disclosure Model Regulation:
The Annuity Disclosure Working Group:

• Continued its discussion of draft revisions of annuity illustration guidelines being worked on by the American Academy of Actuaries and the ACLI.
• Reviewed latest draft buyer’s guides and extended the timeline for comment on all three guides. NAIFA Government Relations staff members Gary Sanders and Ron Panneton have both spent countless hours on conference calls with a subgroup of the Working Group to try to make the guides simple and understandable for consumers.
• Agreed to ask to Life Insurance and Annuities (A) Committee for a one-year extension to complete its work revising the Annuity Disclosure Model Regulation, including annuity illustration guidelines and buyer’s guides.

Regulatory Modernization Public Forum:
A new meeting was scheduled at the last minute to have discussion and comments from interested parties concerning the discussion draft produced by a number of key individuals/regulators within the NAIC concerning a National Insurance Supervisory Committee (NISC).  The NISC is a concept where Congress would authorize states to establish a compact in a number of areas to develop national standards which would be binding on the states.

During the Forum, regulators reviewed the objectives and purpose of the draft proposal and opened the floor to interested parties for comment.

Ron Panneton testified that the NISC development process to date needs to be amended to make sure that state legislative stakeholders are included in the development of and the ultimate implementation of the proposal. Ron stated that, from the testimony of two state legislators at the Forum, it was clear that the NAIC needs to consider additional ways of including state legislative stakeholders in the process.

Ron did testify that NAIFA is certainly supportive of regulatory modernization, enhanced consumer protections and uniform standards in those areas where it is appropriate. The NAIC emphasized that the proposal is simply under consideration and based on feedback and comments from all interested parties the NAIC will decide whether to move forward with the initiative.

National Insurance Producer Registry (NIPR):
The NIPR Board met during the meeting and elected its officers for 2010 as follows:

• President: Alaska Insurance Director Linda Hall
• Vice President: NAIFA Senior Vice President, State Government Relations Bill Anderson
• Secretary/Treasurer: Tennessee Insurance Commissioner Leslie Newman

The Board also approved a new Mission and Vision Statement for NIPR:

• Mission Statement – NIPR is a unique public-private partnership that supports the work of the states and the NAIC in making the producer licensing process more cost-effective, streamlined and uniform for the benefit of regulators, the insurance industry and the consumers they protect and serve.
• Vision Statement – NIPR provides one-stop shopping for all aspects of electronic producer licensing.

It is an outstanding success that NIPR can now process Non-Resident Licensing for all states except Washington and Massachusetts.  Therefore, NAIFA members can apply for non-resident licenses almost everywhere utilizing NIPR’s electronic licensing in real time.

Health Care Reform Public Hearing:
The Health Insurance and Managed Care (B) Committee held a public forum to hear testimony on any implementation issues that state regulators should consider if federal health care reform is enacted.  Three panels provided an overview and perspectives from the consumers and industry and it was clear that there are numerous elements in both the House and Senate versions that will require the NAIC and the states to change model laws and enact legislation to carry out the intent of Congress.

The pending federal health insurance reform legislation continues to exclusively rely upon the state insurance laws for licensure and to ensure financial stability and solvency of insurance companies.  The legislation also imposes new federal standards relating to marketing, unfair practices, and the accessibility, affordability, and content of health insurance products.  This will affect many state laws now in place and will preempt others requiring states to address these changes.  NAIFA will be working with the NAIC and the states as it becomes clear what needs to be done.

Producer Licensing:
The Producer Licensing Coalition discussed plans for continued outreach efforts to the states to assist in achieving uniformity in producer licensing.  The 2009-2010 Outreach Project will continue to draw on teams composed of Coalition commissioners, producer licensing regulators and industry representatives to revisit priority issues with each state as they did in 2008.  NAIFA will participate in this effort as we did in 2008 and involve our state associations in any necessary legislative or regulatory changes that need to be made.

• The Producer Licensing Working Group:
• Presented a report to the Producer Licensing Task Force discussing the work that it had done on developing a limited lines ancillary license that would cover lines where the insurance was ancillary to the activity, such as travel insurance.  The Working Group could not agree on a final product and asked the Task Force for further guidance.  The Task Force will be meeting by conference call early in 2010 to discuss this.
• Discussed the status of the NAIC/NIPR Attachment Warehouse for Reporting of Actions and found that 49 states are participating.  Only Washington and Massachusetts do not.  This Warehouse allows producers to report any action taken against them in any state to the Warehouse and alleviates the need to report to each state in which the producer is licensed.
• Discussed possible tasks for 2010:
• Provide oversight and ongoing updates to the State Licensing Handbook
• Establish guidelines for uniform producer licensing examination process
• Serve as informal focus group with NAIC for the development and delivery of State Licensing Handbook training
• Further discussion of limited lines issue

Military Sales Practices Model Regulation:
The Military Sales Working Group reported:

• As of December 1, 2009, 50 states have adopted the Model Regulation which represents over 1,200,000 of CONUS (Continental United States) active duty military personnel.
• The Model seeks to address certain acts and practices which, until now, have not specifically been declared to be false, misleading, deceptive or unfair under state unfair trade practices statutes.
• NAIFA supports this Model and our state associations have also supported the adoption of this Model in all the states. These associations have done an excellent job supporting the adoption of this necessary measure in the states.

NAIC-IMSA Social Media Education Session:
NAIC, together with the Insurance Marketplace Standards Association (IMSA), held a session on social media and the implications for producers, insurers and regulators.  Focusing on Facebook, LinkedIn, Twitter and others, the session discussed the myriad opportunities these sites present for producers and then discussed the regulatory implications of their use in insurance marketing.

It was pointed out that most insurance companies have not developed policies for use of social media and many have prohibited their agents from using them.  The session urged companies and regulators to educate themselves in this area because social media will be used more and more.  The NAIC representatives stated that there will probably be increased emphasis on social media during 2010.

Interstate Insurance Product Regulation Commission:
The IIPRC and its Management Committee held a joint meeting to discuss new initiatives and mark the end of a successful year during which the number of registered filers and filings received doubled last year’s total.  NAIFA serves on the industry advisory committee to the Commission and Bill Anderson attended the meeting for NAIFA.

NAIFA Staff Contact: William Anderson, Senior Vice President – State Government Relation, at (703) 770-8193 or; Ron Panneton, Senior Counsel – State Government Relations, at (703) 770-8187.