NAIC's Insurance Compact Amends Filing Rule

The Interstate Insurance Product Regulation Commission is giving insurers extra time to transition some of their systems to the standards used for the National Association of Insurance Commissioners' compact.

The IIPRC, better known as the Insurance Compact, amended its filing rule to allow the additional flexibility for insurers transitioning approval of their asset-based products to the IIPRC standards. The change removes a two-year deadline for integration.

Abolishing the deadline recognizes the logistical and financial difficulties companies face in refiling their portfolios from individual state-based systems, Ohio Insurance Director Mary Jo Hudson, vice chair of the compact, said in a statement. "As we continue to adopt uniform standards for all product lines, companies will have an increased incentive over time to fully rely upon the IIPRC as the primary means of filing with compacting states and realizing the speed-to-market efficiencies associated with preparing one filing subject to one prompt review and approval for use in up to 36 states," she said.

The compact, which welcomed its first members in 2006, establishes uniform standards for life insurance, annuities and long-term care coverage, so far enacting 54 such standards. It also provides a central point for digital filing capability. According to the compact, it now covers almost 60% of U.S. premium volume for individual and group life, annuity, long-term care and disability.

In May, a U.S. Government Accountability Office report determined that too many states do not participate in the NAIC's pro-uniformity initiatives and that implementation remains inconsistent. Differences in state laws are continuing to limit reciprocity in the regulation of property/casualty insurance products, according to the report. The GAO found that several states have not joined the Insurance Compact because they believe their processes and protections are superior to the compact's, according to the report (BestWire, May 11, 2009).

Missouri became the 36th compact state in July. However, key states including California, New York, Florida, Illinois and New Jersey do not participate (BestWire, July 14, 2009).