REPORT ON BILLS FAVORABLY REPORTED BY COMMITTEE

TITLE OF BILL:

AN ACT ADOPTING THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS' INTERSTATE INSURANCE PRODUCT REGULATION COMPACT.

SPONSORS OF BILL:

REASONS FOR BILL:

The Interstate Insurance Product Regulation Compact was developed to provide federally uniform requirements and regulations. Currently, insurance products are regulated individual states and approval must be sought by insurers. The Interstate Compact agreement will establish a Committee that will oversee and institute national standards for insurance products. By adopting the Interstate Compact, consumers and insurers would benefit from interstate coordination and allow for efficient and quality product review and repeal processes, nationally uniform standards, access to advanced and modernized insurance products, and more efficient and timely administrative procedures. The Interstate Compact will not take effect until 26 states have joined.

RESPONSE FROM ADMINISTRATION/AGENCY:

Susan F. Cogswell, Insurance Commissioner, State of Connecticut Insurance Department, testified in support of HB-5028. Commissioner Cogswell noted the Compact agreement allows for access to quality insurance products within a reasonable amount of time with standards developed and daily operations overseen by a multi-state committee with representation from regional areas. Commissioner Cogswell also referred to the option to reject product standards by passing state legislation to do so or by showing such standard does not provide protection for residents under specific circumstances of the state. A state could also pull out from the Compact at any time by repealing the statue enacting the Compact into law. Commissioner Cogswell supports this initiative.

Cheye Calvo, National Association of Insurance Commissioners, (NAIC), spoke before the Committee in support of HB-5028. Mr. Calvo provided testimony that supported the transparency and accountability within the insurance industry and suggests the Interstate Compact will help achieve this goal. By organizing resources to universalize review and approval methods of insurance products, Interstate Compact will assure product standards are raised and the consumer protection is kept to high standards while still allowing for individual states to opt out of specific standards if the needs of the state are not met. Mr. Calvo provided testimony quantifying the history of development and current regulation processes.

Attorney Richard Blumenthal, State of Connecticut Attorney General, submitted written testimony in opposition to HB-5028, suggesting the establishment of such a compact is premature. Attorney Blumenthal attests there is no approval process, protection regulations, or product standard available for review and comparison to current state regulations and thereby leaves question as to whether the Interstate Compact will be effective in providing protection to consumers. Attorney Blumenthal is opposed to HB-5028 as: it removes the ability to hear legal cases pertaining to the Commission's actions from the state's court system; the Compact, once enacted, cannot be broken until all states have withdrawn; and does not guarantee freedom of information rights. Attorney Blumenthal strongly opposes HB-5028.

NATURE AND SOURCES OF SUPPORT:

John Parker, National Association of Insurance and Financial Advisors of Connecticut, Inc. (NAIFA), spoke in favor of HB-5028, citing the Interstate Compact would provide consumers with a more efficient, beneficial regulatory process with the ability to offer higher quality, updated products meeting nationally uniform standards. Insurers would be provided efficient administrative policies that would reduce redundancies and allow the reallocation of resources to provide better service to their policyholders.

Joseph DeCresce, The Phoenix Companies, Inc., testified in favor of HB-5028 claiming it is a “milestone in insurance regulation”. By adopting consistent national standards, the Interstate Compact provides access to insurance products in a timelier manner. Mr. DeCresce suggests standardization of products will reduce costs overall with savings passed on to the consumer.

Mike Barthlomew, American Council of Life Insurers (ACLI), submitted testimony in support of HB-5028. Mr. Barthlomew testified products currently undergo review and approval in each state prior to being sold; Interstate Compact will reduce the redundancy in this practice by creating a single point of reference for review and approval of insurance products, thereby allowing products to enter the market in a more timely fashion. The costs incurred by insurance companies for additional review processes will be reduced equally benefiting insurers and consumers.

Susan Giacalone, Insurance Association of Connecticut (IAC), spoke in support of HB-5028. Ms. Giacalone compared the federally regulated financial services market to the current individual state regulations imposed on insurance products, maintaining different standards for insurance products among different states require revisions in policies that create an additional expense in time and cost for an insurance company. Ms. Giacalone noted—as of the hearing date—20 states had signed on to the Interstate Compact agreement which can not go into effect until 26 have joined.

Warren Ruppar, Independent Insurance Agents of Connecticut, Inc., submitted written testimony in support of HB-5028 and noting the bill would provide insurance companies with a modernized regulatory system that would bring effectiveness to the current regulation process.

Kate Kiernan-Pagani, MassMutual Financial Group, provided the Committee with written testimony supporting HB-5028 and noting the enactment of Interstate Compact is an important initiative as it would enable companies to better serve consumers. In testimony, MassMutual submits costs are increased by repetitive filing and review processes, a policy which will be updated under the Interstate Compact. Ms. Kiernan-Pagani urges the Committee's support of this bill.

NATURE AND SOURCES OF OPPOSITION:

Angelo Ziotas, Connecticut Trial Lawyers Association (CTLA), testified urging the Committee's rejection of HB-5028. Mr. Ziotas stated the Interstate Compact diminishes the ability of the State of Connecticut to oversee standards imposed by the Compact's Commission and does not ensure the state's ability to bring suit against an insurer that may not be acting in the best interest of an insured. Mr. Ziotas concluded in his written testimony the undemocratic arrangement of the Commission as members will not be elected, meetings are not mandated to be open to the public, and members are provided immunity regardless of whether their actions are irresponsible and discounting to consumer rights.

Raphael Podolsky, Legal Assistance Resource Center of Connecticut, Inc. (LARCC), submitted testimony in opposition to HB-5028. Mr. Podolsky's testimony suggests Interstate Compact is an attempt toward the quasi-privatization of insurance regulations and can invalidate the effective consumer protection standards already in place in the state. Mr. Podolsky stated the adopted rules of the Interstate Compact will be binding with permissions for removal of specific provisions only when mitigated by enacted legislation. The LARCC urges rejection of HB-5028.