POLITICS AND POLICY IN THE SOUTHWEST

Rough Notes, Jan 2004 by Hennosy, Kevin P

NCOIL's national meeting reflected well on the organization

Santa Fe is the oldest European community west of the Mississippi. The capital of the great state of New Mexico holds the title of the oldest capital city in North America. In short, people have been talking politics in Santa Fe for a very long time.

That long tradition of political discourse in Santa Fe continued with gusto in late November 2003, When the National Conference of Insurance Legislators (NCOIL) conducted its annual meeting there. One can report with certainty that the state legislators talked some politics.

NCOIL is an organization of state legislators whose primary interest is insurance legislation and regulation. Many legislators active in NCOIL are chairs, vice chairs, or members of the committees responsible for insurance in their respective state houses across the country.

While most NCOIL attendees flew in and out of Albuquerque, my wife and I drove to Santa Fe from Kansas City, Missouri. No, driving more than 700 miles was not just a matter of being cheap. We enjoy the history and scenery that come with long drives in the West. The relatively low expense was just thrown in to boot.

We roughly traveled along the route scouted by Kit Carson and William Becknell in the 1820s. Our route took us past Council Grove, and through Great Bend, Dodge City, Pawnee Rock, Garfield and other points west in Kansas. From Clayton, New Mexico, we cut across the wide open plains until we dropped south following the eastern edge of the mountains into Santa Fe. The back roads trip took 13 hours. In the mid-19th century the same journey took two months at 14 miles a day.

Unlike the merchant-traders who trekked to Santa Fe in the 19th century to sell manufactured goods and returned with tradable commodities, NCOIL came to Santa Fe with the raw material of ideas and left with a few manufactured products. These products take the form of model laws and resolutions. NCOIL members will carry the proposals that they hammered out in Santa Fe back to state capitals across the country. We will see if they find any buyers.

Market

The legislators heard extensive comment on a model law aimed at insurance market conduct regulation. The State and Federal Relations Committee, chaired by New York State Senator Neil Breslin, will present a revised version of the model law this month.

The legislative model seeks to build a system, of market conduct oversight that reduces the need for expensive examinations through statistical analysis and uniform procedures. The NCOIL approach to market conduct relies on cooperation rather than redundancy in state oversight.

The legislators have been crafting a model act for six months now. When the process began, few observers dared to expect that NCOIL could make so much progress in such a short period of time. The doubts were never a poor reflection on NCOIL's ability. They reflected the enormity of the problem.

However, a change-an improvement-in NCOIL's abilities should receive recognition. A decade or so ago, NCOIL was clearly viewed as the shock troops of the insurance lobby in state legislatures. The organization was effective but not necessarily credible. (Yes, Virginia, credibility and effectiveness do not go hand-in-hand in state legislatures.)

NCOIL has worked to improve the professionalism of its proceedings in the last several years with the able help of Bob Mackin and his staff. This more professional approach has been quite evident during the deliberations on the market conduct model law.

If NCOIL is able to address this troublesome issue in a timely and effective fashion, the organization will become a more essential player in national policy development. This outcome looks more and more likely as the market conduct proposal moves toward completion in late February.

Flood

At the NCOIL National Meeting in Santa Fe, the legislators also debated the implementation of the National Flood Insurance Program. NCOIL adopted a model law that was designed to even the playing field between property loans made by state banks and national banks. The recommendation addresses a concern that some property owners who expect payment after a flood avoid the cost of flood coverage by dealing with state banks.

The model law requires state banks to follow procedures that are based on federal rules established by the Federal Emergency Management Agency (FEMA). The National Flood Insurance Program (NFIP) was created by Congress in 1968 in response to the rising costs of disaster relief program for flood victims and the rising amount of flood damage across the country. In 1983, the Write-Your-Own (WYO) Program was created as a joint undertaking between insurers and the Federal Insurance Administration. It operates within the NFIP and allows participating insurers to write and service the standard flood insurance policy while the federal government continues to retain responsibility for the underwriting losses. This means that unless there is a widespread disaster, operating expenses and flood insurance claims are not paid for by the federal government, but through premiums collected for flood insurance policies.