Last year, the insurance industry warned that that if Connecticut didn’t pass a law allowing it to join other states in creating interstate product approval standards, those standards would likely be created without the state’s input.
Turns out they were right.
An interstate compact organized by the National Association of Insurance Commissioners (NAIC) is aimed at speeding new products to market by creating uniform review of life insurance, annuities, disability income and long-term care products.
In early 2006, fewer than the required 26 states had passed a rule allowing their insurance chief to sign on. Connecticut’s General Assembly considered joining, but passed out of concern that the agreement would weaken the Connecticut Insurance Department’s authority and could be harmful to consumers.
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This time around, the compact has a majority of states and is moving forward forming the new rules. Tennessee was the most recent to join last week, giving the compact 29 states and Puerto Rico.
Given Connecticut’s history as an insurance Mecca, being left behind by states like Tennessee has rankled the local industry. Every other state in New England is already a member.
“We’re the only state in the area [that hasn’t joined] and we’re a lead state in the industry,” said Susan Giacalone of the Insurance Association of Connecticut (IAC).
Both the Department of Insurance and the Department of Economic and Community Development (DECD) are supporting the bill, as is a national group, the American Council of Life Insurance.
Former Insurance Commissioner Susan Cogswell estimates that Connecticut companies generate $6.7 billion in premiums for products that fall under the compact.
Barbara Fernandez, who runs the office of Insurance and Financial Services for DECD, believes the compact is key to recognizing the importance of the industry in the state and was bringing that message to legislators last week.
But Attorney General Richard Blumenthal believes the compact would encroach on the purview his office and the Insurance Department has to regulate the industry.
He has also indicated that the compact could be a precursor to regulation by the federal government.
Robert Kehmna, president of the IAC, disagreed, saying, “I don’t think the two are related.”
