As reported in the Wall Street Journal, industry members took NAIC leaders to Nick's Fishmarket, a Chicago restaurant, to hold their ex parte meeting which was part of a coordinated industry effort to shatter the progress of the past decade. As consumer advocates watching this process, we at first found the blatancy of this approach almost comical. But, as the NAIC began to respond to the industry by backing off of some of their initiatives, we became outraged and dismayed. It must be. State regulation is at a crossroads.
Monumental trends require coordinated responses by the states.
These trends include insurance mergers with banks and securities firms, Internet sales being made from anywhere in the world, insurance fast becoming a global business, mergers creating giant insurance entities, sharp growth of alternative insurance markets including securitization of risk, captive insurers and risk retention groups and the threat to move to a weaker state to do anti consumer activities such as demutualization or bad bank good bank type restructuring. As we move toward the millennium, it is clear to the consumer advocacy community that NAIC cannot be an effective or trustworthy organization without independent funding. Control of the NAIC nominally rests with the 50 state insurance commissioners but the recent developments show that control has been subverted by the industry boycotters. The NAIC should never be put into the position of having to go, hat in hand, to the regulated to beg for money and to shave the agenda to meet the demands of the regulated. It is time for individual governors and the National Governors Association to make independent funding of the NAIC a priority issue.