NU Online News Service, July 12, 3:08 p.m.EDT

A senior member of the House Financial Services Committee todayasked the Federal Insurance Office to conduct a comprehensivereview of the operations and structure of the National Associationof Insurance Commissioners.

Rep. Edward Royce, R-Calif., says the review is a “necessary”threshold step “prior to having a comprehensive discussion on thefuture of U.S. insurance regulation” because the NAIC currentlylabels itself the “home of U.S. insurance regulation.”

He says he has observed over the year he has been in Congressthat the insurance regulatory regime in this country is “out ofdate and inefficient,” and “the heart of that system is theNAIC.”

Royce requested the review in a letter delivered today toMichael McRaith, FIO director.

Royce contends NAIC practices are problematic from a legalperspective as well as a good governance perspective.

“If they were a federal regulatory agency, there would be checkson their budget and their operations,” Royce explains.“Unfortunately, very few checks exist today on the NAIC.”

NAIC officials in Washington confirmed that they had receivedthe letter, but said they would have no comment.

Royce is a senior member of the Capital Markets and FinancialInstitutions and Consumer Credit Subcommittees of the FSC.

He says in his letter, “Despite not having generalCongressionally-authorized regulatory power,” recent NAIC actions“would suggest it and its members believe it does, in fact, have”regulatory authority.

“And despite claims that most policy discussions are held in apublic forum, meeting records suggest otherwise,” Royce says.

“My 'ask' to Director McRaith in this letter is simple: take alook at NAIC's structure, the actions it is taking, and itsbudgetary process,” Royce says in the letter.

“Does it have the necessary accountability?” Royce asks.

Royce says, “It is my hope that Director McRaith's pendingreport on insurance modernization will kick off a debate on thefuture of insurance regulation in the U.S; however, I don't believewe can have that discussion without first conducting an analysis ofone of the key players in the existing system.”

Elizabeth Festa contributed to this report