In an effort to more effectively regulate Washington insurance companies, Insurance Commissioner Mike Kreidler will ask the 2005 Legislature to pass legislation enabling Washington to participate in a coordinated, state-based system of regulation at a national level.

Known as the Interstate Insurance Product Regulation Compact, the agreement is sponsored by the National Association of Insurance Commissioners (NAIC) to streamline insurance product regulation. It comes in response to an insurance industry-based effort calling for the federal government to assume regulatory responsibility of the insurance industry. Kreidler believes states can provide more responsive and effective regulation than the federal government.

This initial foray into the multi-state, coordinated system will be limited to life insurance, annuities, disability income and long-term care (optional) products.

Streamlined processing

The new system will allow insurers to more quickly market certain types of insurance products nationally, and to reduce the number of variations of the same product that a company must produce to meet state-specific product standards.

The compact agreement calls for creation of a multi-state commission to receive, review and quickly make regulatory decisions on these insurance product filings according to national uniform standards. Member states would create uniform product standards for products to be filed with the compact.

Additional Benefits

The compact will allow life, annuities, disability income and long term care insurers, competing on a regional or national scale, to file their products in a reasonable amount of time and in one central filing place (i.e. the multi-state commission), rather than requiring them to file in numerous individual states.
Products filed under the compact will be subject to a high-quality review process.
The compact is intended to help insurers get their products to market more quickly, enabling consumers to have quicker access to more competitive products.

Who's in charge?

A multi-state commission (each participating state represented by one member) will govern and oversee the compact.
Individual states will continue to regulate market activities.
The compact allows for coordination between the states and the commission to determine violations of uniform standards.
The commission will not be part of, or controlled by, the NAIC.
The compact comes into existence when two states enact compact legislation.
The commission doesn't become operational until 26 states, or states representing 40% of the premium for life, disability income insurance, and long term care, join the compact.

How will it be financed?

The initial implementation plans include NAIC assistance. Ultimately, operations of the commission will be financed by filing fees paid by insurers. Currently there are plans for establishing a small paid staff to administer the compact in 2005.

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