Product Approval Reforms Use Both Centralized and State- Based Approaches

Through NAIC’s Speed to Market initiative, state insurance regulators are  trying to streamline regulatory processes associated with insurance  product approvals to make products available to consumers more quickly. A principal aspect of this initiative is to develop a more centralized  product filing and approval process for certain types of insurance  products that are sold on a multistate or nationwide basis. NAIC has also developed a model law aimed at streamlining the product  approval process for commercial property and casualty insurance. This initiative and  others were highlighted in NAIC’s Statement of Intent: The Future of  Insurance Regulation, endorsed by NAIC in March 2000 in response to  GLBA and changes in the financial services sector. Activity on this initiative is now focused on streamlining  existing state-based company licensing processes for the benefit of  insurers that wish to conduct business in multiple states. Conclusions

In this statement, we have discussed three of the initiatives outlined in  NAIC’s Statement of Intent for regulatory modernization—licensing  nonresident producers (Producer Licensing Reciprocity and Uniformity),  approving new products (Speed to Market), and coordinating the oversight  of companies that operate in multiple states (National Treatment of  Companies).
What GAO Found

The National Association of Insurance Commissioners (NAIC), through its Accreditation Program, has made considerable progress in achieving uniformity among state insurance regulators. In addition, competitive pressures from further consolidation in the financial services sector and enactment of the Gramm-Leach-Bliley Act has focused attention on regulator reforms in the insurance industry. NAIC's Producer Licensing Reciprocity and Uniformity initiative aims to streamline the licensing process for selling insurance in multiple states. State regulators are also trying to streamline regulatory processes to bring new insurance products to market more quickly. NAIC's Speed to Market initiative focuses both on developing a more centralized filing and approval process for life and health insurance products and on improving existing state-based approval processes for other types of products. Finally, NAIC's National Treatment of Companies initiative aims to facilitate the licensing process for conducting business on a multistate basis. However, NAIC and the states face significant challenges in implementing their initiatives.