New NAIC CEO Wants To Preserve State-Based Regulation
January 24, 2013 by Tom Harman
Ben Nelson, the former U.S. senator andNebraska governor appointed as the new chief executive officer of theNational Association of Insurance Commissioners, said he looks to preserve the industry’s state-based regulatory system while crafting partnerships with international regulators and insisting the federal government’s influence over the industry should be limited.
NAIC hired Nelson after it conducted a nationwide search following the resignation of Terri Vaughan in late November. Nelson was named to the post onJan. 22 and NAIC held a press conference for him and other top officials onJan. 23. Nelson’s two-year contract pays a base salary of$950,000 per year and is renewable. Nelson said he will do no lobbying, out of respect for a two-year restriction placed on federal employees who leave their posts.
Nelson said he took the job at NAIC, where he worked from 1982-1985 as vice president and chief of staff, because of the new set of challenges the NAIC faces. Nelson arrives less than a year before states ramp up health insurance exchanges nationwide, with the federal government stepping in to operate up to two-thirds of them. He arrives as NAIC adjusts to the creation of the Federal Insurance Office, formed as part of the Dodd-Frank Wall Street Reform Act of 2010, and is in talks with theEuropean Union and other national agencies as they look to find ways to mesh with U.S. markets.
Nelson told Best’s News Service his goal is to marshal NAIC’s assets to ensure affordable, available insurance and that he’d look to ensure the federal government does not take over insurance regulation. “The states have done an outstanding job over 150 years protecting the people back home and my goal and my job is to see that the states are able to continue do to that in the best way possible,” he said.
During the press conference, Nelson said his return to NAIC is fueled by his interest in bettering the relationship between state insurance commissioners and their constituents. “This is about state-based regulation to take care of the folks back home in the most appropriate fashion possible to have affordable and available insurance,” he said.
Nelson sees a limited federal government role in its dealings with the insurance industry and he said he wants to keep it that way. He said he wants to ensure the federal government does not expand its authority beyond what FIO is asked to do. “It is not a system that is broken. It doesn’t need to be scrapped. It doesn’t need to be replaced,” he said. While admitting there are improvements that could be made, he said a pending FIO report to provide lawmakers with suggestions on how to improve the industry is an appropriate relationship between FIO and states, but by no means can FIO regulate. “There is no need for dual regulation, but a partnership to find a better way through best practices and best use of facilities and expertise on a combinNelson and other top NAIC officials spent considerable time answering questions about the health exchanges that will begin operating in 2014.
Pennsylvania Insurance Commissioner and NAIC Secretary-Treasurer Michael Consedine said there are still plenty of questions states have, including how they will work, whether they will result in lower insurance premiums, what level of choices do consumers have. NAIC, he said, can help states engage with the HHS to help states prepare consumers for what he said would be “a very turbulent transition” from the current system to something radically new for most.
North Dakota Commissioner and NAIC President-elect Adam Hamm said his state would have a federally run exchange. But he said he remains concerned about whether the federal exchange choice will impact the regulatory authority of states using them. “And I don’t think I’m alone. I think any commissioner that’s going to have a [federal exchange] operating in his state wants to know that,” he said. “The last thing we need in America is dual regulators or federal regulation of insurance.”An NAIC Health Care Reform Alternatives Working Group is investigating this question, he said.
Nelson said one of the NAIC’s goals is to find ways to work with international groups to make sure that partnerships developed at any level recognize the importance of state-based regulation. NAIC is in talks with theEuropean Union concerning how to improve coordination between new EU Solvency II plans that regulate and supervise insurance companies operating in the EU with the U.S. state-based system. Nelson said NAIC and states should have a partnership with international regulators, particularly those inEurope, to be sure they understand the U.S. regulatory system and vice versa. “I’ll spend a great deal of my time working with international regulators, as will the commissioners, to be certain that we understand each other and we will do what’s best for our people back home,” he said.
Leading national insurance industry groups backed the NAIC’s choice of Nelson (Best’s News Service,Jan. 22, 2013). TheNational Association of Mutual Insurance Companies, which twice named Nelson the winner of its Benjamin Franklin Public Policy Award, said Nelson understands the role and value of free enterprise unburdened by excessive regulation, said NAMIC President and Chief Executive OfficerCharles Chamness. “We look forward to working with Senator Nelson to not only improve the opportunities for more competitive insurance markets resulting in more consumer choices and lower costs, but also to initiate much-needed reforms within the NAIC that lead to greater transparency and accountability in its work,” he said.
Go to http://www.ambest.com/v.asp?v=nelson113 for the full interview with Nelson.
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