The NAIC has been under fire lately for acting like a Star Chamber of sorts. A recent A.M. Best article (see link below) claims that the industry is pointing it's collective finger at the NAIC for devolving into a "secretive cabal out to hoard insurer information and keep decision-making private.” It seems like everyone—the American Insurance Association, the American Council of Life Insurers, even the National Council of Insurance Legislators—is taking shots at NAIC for making decisions in secret, or jeopardizing productive working relationships, or sleeping with the (federal) enemy.
A.M. Best article
I’ve seen some of that ‘secretive cabal’ nonsense first hand. When I attended NAIC’s Spring Meeting in April, I sat through all the pomp and circumstance, the greetings and groveling, even the part commemorating SERFF’s 10th anniversary that was set to music, only to be asked to leave when the commissioners got to the good stuff like agents’ commissions, life settlements and market conduct studies. The General Session agenda called it the “regulator-to-regulator” portion of the program and only insurance commissioners could attend.
Now don’t get me wrong. Most of what actually happens at these events goes on behind the scenes. The moving and shaking takes place in the hallways between sessions, beside the pool bar, in the elevator. But when the entire room—staff, attorneys, media, consumer representatives and everyone else not an insurance commissioner—got up and left the General Session so the commissioners could start what amounted to the real meeting, I was a little put out.
Industry folks claim that the NAIC is facing an “identity crisis” (brought on in part by proposals for increased federal regulation of insurance) or that it’s “overcompensating” (for its reputation for inaction) by pushing through proposals that are controversial. But aren’t (some) of these critics the same ones who stalk the commissioners mercilessly, hunting them down in the corridors to blatantly seek favor? There are commissioners who don’t stay at the official meeting hotel so they can sleep in peace. I saw one commissioner in shorts and running shoes, obviously ready to hit the trails, practically cringe when he saw a group approach, their leader sticking out his hand and bellowing “Can we buy you a drink Mr. Commissioner?”
Conflicts between regulators and the regulated certainly aren’t anything new under the sun. Former North Dakota Insurance Commissioner Jim Poolman had it right when he told BestWire that accusations about the NAIC’s decision-making have been around “since Christ wore sandals.” The indefinite postponement of the NAIC’s planned July 8 vote on the controversial expansion of market conduct studies could suggest that the NAIC may be listening. Or that the NAIC is going to the mattresses.
NAIC President Sandy Praeger dismissed concerns about secretive decision-making and told BestWire “When you can’t win on the merits, you go to the process.” Is the NAIC minding the store or is it really telling its critics to mind their own business? Big Brother has lots of siblings and they’ve all got their eyes on each other.