US Treasury Report Recommends the Compact as Means to Increase Consumer Choice and Decrease Cost
WASHINGTON (November 7, 2017) - A recent report from the U.S. Treasury Department — A Financial System That Creates Economic Opportunities Asset Management and Insurance (Treasury Report) — discusses the state-based product approval process and speed to market. The report specifically mentions the Interstate Insurance Product Regulation Commission as part of its recommendations to increase consumer choice and decrease costs for both insurers and consumers. Here is an excerpt from the Treasury Report:
The Interstate Insurance Product Regulation Commission (IIPRC)
The states and the NAIC have long recognized concerns over lack of uniformity in product approach and taken steps to improve the process. In July 2003, the NAIC adopted the Interstate Insurance Product Regulation Compact (Compact), which created the Interstate Insurance Product Regulation Commissioner (IIPRC). The IIPRC develops uniform product standards for specified life insurance, annuity, disability income, and long-term care products. If a product is filed for approval with the IIPRC, its uniform product approval standards supersede the standards of any compacting state unless the insurer submits a product directly to a compacting state's insurance regulator (and not the IIPRC for approval).
Despite the IIPRC's accomplishments, the nationwide uniformity and efficiency of the product approval process remain a work in progress. California, Florida and New York, which collectively represented 20.5% of nationwide premium in 2015, have not joined the Compact. Insurance company representatives have called attention to a common pattern: a new product obtains approval in a majority of states through the IIPRC or direct filings within several months, but approval in the remaining states, including some states with large populations, can take additional months or even years. In some cases, a product is never approved by all states. In addition, even when products are approved, inconsistent or conflicting state laws, regulations, and regulatory practices create state-by-state variations, resulting in significant additional costs for insurers with respect to product administration and marketing.
To increase consumer choice and decrease costs for both insurers and, by extension, consumers, Treasury encourages the NAIC to bring in states that have not yet joined the Compact. Treasury also encourages the IIPRC to continue its efforts to complete the development of standards for all product lines within its authority. Finally, Treasury recommends that the states take steps to mitigate inconsistent or conflicting state laws, regulations and practices applicable to approval of insurance policies.
Citation: U.S. Department of Treasury, A Financial System That Creates Economic Opportunity Asset Management and Insurance, by Secretary Steven T. Mnuchin and Counselor to the Secretary Craig S. Phillips, pages 120 – 122 (October 2017).
About the Commission
Currently, 45 jurisdictions have joined the Interstate Insurance Product Regulation Commission (IIPRC). Compacting members are Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.
The IIPRC enables state insurance regulators to develop uniform national standards for asset protection insurance products, such as life insurance, annuities, disability income and long-term care insurance. The IIPRC establishes a central filing point for these insurance products, enhancing the speed and efficiency of regulatory decisions and allowing companies to compete more effectively in the modern financial marketplace, while continuing to provide protection for consumers.
For more information, visit www.insurancecompact.org.