Support State Reg., Pickens Urges NCCI

By Daniel Hays

NU Online News Service, May 16, 11:05 a.m. EDT, Orlando,Fla.?The president of the National Association ofInsurance Commissioners warned yesterday that if the federalgovernment were to regulate insurance the industry would face aremote, politicized, unresponsive system.

"When you're a consumer and you call 911 with a problem, youwant that to be a local call," Mike Pickens told the annualsymposium of the National Council on Compensation Insurancehere.

Mr. Pickens' plea for the group to support continued stateregulation over proposals for federal control may have gained someurgency after an interactive poll of the audience, taken before hespoke, showed support for state regulation had lost a fewpoints.

Asked what form of regulation they favored for insurance, 51percent said state, 27 percent voted for federal and 22 percentfavored some combination of the two.

Last year the numbers were 62 percent for state, 14 percent forfederal and 24 percent for a combination of the two.

A federal regulator would not be nearly as accountable as astate regulator, said Mr. Pickens, who is the Arkansas insurancecommissioner. He also warned that a federal regulator would be"highly politicized."

When a state regulator makes a decision that is adverse to theindustry, under the current framework, insurers have 49 otherstates where they don't have to deal with that situation, whichwould not be the case with a federal regulator's ruling, he pointedout.

Mr. Pickens mentioned that even if federal regulation went intoeffect, state laws would remain?a federal layer "would be piled ontop."

Additionally, he predicted that federal and state regulatorswould be "trying to outdo one another."

He said, from visits to Washington, that his sense is thatCongress has come to realize from the debate over passage of theTerrorism Risk Insurance Act that insurance can be a highly chargedpolitical issue.

Rather than federal regulation, he said, he believes they arenow leaning more toward laws which would require states toinstitute certain reforms by a certain date, or see a federalregulation put in place, as was the case with licensingrequirements in the Gramm-Leach-Bliley Law.

Mr. Pickens said all of the state regulators have realized thatstate regulations have to be less costly and less burdensome, andhe drew applause when he said it was "unacceptable" for any stateto take 30 days to review an insurance product proposal. "Everycommissioner believes it's unacceptable," he said.

Mr. Pickens noted a variety of steps that state commissionershave taken to improve their operations. He pointed to the SystemElectronic Rate Form Filing, an automated process for filing of alllines now accepted by Arkansas.

In answer to a question from the audience, Mr. Pickens said thatthe NAIC has not taken a position on whether the Terrorism RiskInsurance Act should be continued past its sunset date of 2005, buthis personal opinion is "we do need to extend."

He said that "terrorism is not a risk an insurer should have tobear?this is a war risk." He added that the risk should be borne bytaxpayers.