OLDWICK, N.J. - (Business Wire) In its regulatory reform blueprint, the Obama administration cited a strong need for modernization in insurance regulation, either through a federal regulator or reforms to the state-based system. Visiting A.M. Best’s Oldwick, N.J. headquarters to speak with top executives, National Association of Insurance Commissioners Chief Executive Officer Therese Vaughan discussed what the organization envisions as the future of state-based regulation in an increasingly interconnected global market. On uniformity and efficiency:
“There are two areas where I would say the regulators are quite focused. One is the recognition that there are things we can do to improve upon uniformity and efficiency in certain targeted areas. That doesn’t mean uniformity is always the answer but it does mean there are areas where we can be more efficient and do things better. The second is, in this increasingly global world how do we present ourselves as a national system of state-based regulation? How do we, when it’s necessary, speak with one voice? In September, we started talking to other people about an idea called a National Insurance Supervisory Commission, and that is something that would allow us to create a body grounded in state law.”
On a draft proposal for a National Insurance Supervisory Commission:
“It is a discussion draft. This is not something the members have voted on. Rather what they have said is ‘this is an interesting idea.’ We began the process of talking to state legislators at the NAIC September meeting. It was a vigorous discussion and we will continue to talk to them. I think eventually we'll come to something where we can all agree this is good for our system.”
On the proposed NAIC 2010 budget that calls for no increase in expense spending:
“We have been very vigilant in our expenses. It is not a goal of mine to maintain a zero growth budget and so I’m not going to promise that we are going to do that forever. It is a goal of mine to be very diligent in our stewardship of the resources that we have.”
On challenges the insurance industry and the NAIC face:
“One is that we’re not through this financial crisis yet. The second is that as the regulatory environment is being discussed in Washington, and we need to be careful it doesn’t create unintended consequences for us and for our ability to protect consumers. The third challenge is clearly health insurance reform. Lastly is this process of improvement in the state-based system, and I would put in that category our regulatory modernization initiative, which I view as a step in a long line of things that have happened over the past 150 years to make state-based regulation better.”
Upcoming Decisions:
The NAIC will host its National Winter meeting Dec. 5 to 8 in San Francisco. Items on the agenda include a vote on the proposed 2010 budget and election of officers.
The budget proposal forecasts total revenues of $73.6 million, a 0.7% increase, and total expenses of $70.9 million, a 0.8% decrease, from the 2009 budget, leaving $2.7 million in expected net revenue.
The 2010 draft reflects a deliberate effort to cut costs in a troubled economy that has not spared NAIC coffers, NAIC President-Elect and West Virginia Insurance Commissioner Jane Cline said in a statement.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
A.M. Best Company
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Jim Peavy, 908-439 2200, ext. 5644
james.peavy@ambest.com
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Rachelle Morrow, 908-439 2200, ext. 5378
rachelle.morrow@ambest.com
