NCSL RESOLUTION ON THE INTERSTATE INSURANCE PRODUCT REGULATION COMPACT

WHEREAS, the states have successfully and effectively protected insurance consumers and ensured the safety and soundness of insurance companies operating in the United States for over 150 years; and

WHEREAS, the National Conference of State Legislatures (NCSL) strongly believes that states should continue as the sole regulators of the business of insurance, and

WHEREAS, the Gramm-Leach-Bliley Financial Modernization Act of 1999 affirmed the creation of an integrated financial services marketplace that places the products of some insurance companies in direct competition with the products of banks and securities firms; and

WHEREAS, the new financial marketplace requires a modern, state-based system of insurance product regulation that will preserve state authority to regulate the business of insurance, will promote high consumer protections and thorough product review, and will permit insurers to bring appropriate products to market nationally in a timely and efficient manner; and

WHEREAS, Congress has called on states to streamline, simplify and modernize state insurance regulation or face federal action, including possible federal insurance regulation, which would preempt state laws, would undermine state authority to protect insurance consumers, and would threaten $12 billion a year in state insurance revenues; and

WHEREAS, NCSL established the Executive Committee Task Force to Streamline and Simplify Insurance Regulation (Task Force) in 2001 to explore the issues that confront state insurance regulation in the modern economy and, if necessary, to develop and review model legislation for state consideration; and

WHEREAS, the National Association of Insurance Commissioners (NAIC) has adopted model legislation for an Interstate Insurance Product Regulation Compact (Compact) to establish a voluntary, state-based system to receive, review and approve life insurance, annuity, disability income, and long-term care insurance products that meet national uniform standards that member states would create; and

WHEREAS, the NCSL Task Force worked closely with the NAIC in drafting the Compact, thoroughly reviewed and considered the Compact model legislation, and recommended several improvements-all of which have been incorporated into the model legislation by the NAIC; and

WHEREAS, the compact ensures broad participation by all member states, incorporates legislative involvement and oversight, encourages decisions through consensus, and protects states' authority to opt-out of uniform standards and, if necessary, to voluntarily withdrawal from the compact; and

WHEREAS, NCSL believes that the Compact is the best way to preserve state insurance regulation while raising insurance product standards, improving the quality of product review, and providing insurance companies the regulatory efficiency that they need to compete in the modern financial services marketplace;

NOW, THEREFORE BE IT RESOLVED, THAT the National Conference of State Legislatures recommends the Interstate Insurance Product Regulation Compact Model Act to the states for their consideration; and

BE IT FURTHER RESOLVED, THAT a copy of this resolution along with the Compact Model Act be sent to state legislative leaders, the members of state legislative committees of interest, the nation's governors, the President of the United States, the Secretary of the Treasury, and the members of the 108th Congress.

Contact for more information:

Cheye Calvo
Committee Director
NCSL Financial Services Standing Committee
Phone (202) 624-8661
Fax (202) 737-1069