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A meeting of minds, and it’s in KC

When it comes to insurance, the Kansas City-based National Association of Insurance Commissioners is probably the most important group you’ve never heard of.

In the absence of federal regulation, the association coordinates the efforts of state regulators, develops national standards, maintains a vast database of insurance company information, and serves as a vital link between regulators and the industry they oversee.

The association also has taken the lead in modernizing and streamlining state regulations by writing several model insurance laws adopted by state lawmakers across the country.

One such effort, an interstate insurance compact, creates a single point of review for new life, annuity and long-term care insurance products. The association also created Insure U, an educational tool available to consumers online at naic.org.

In addition, the association maintains a warehouse of data on insurance companies used by regulators to ensure companies are financially stable. In fact, The Kansas City Star used information from the association’s Web site for its analysis of insurance complaints.

Alessandro Iuppa, Maine insurance superintendent and current association president, said he was not surprised by the newspaper’s findings that the most common disputes centered on claims delays, denials and low settlements.

“That’s where the money hits the road,” Iuppa said.

The Star’s analysis also found a big variance in insurance companies’ complaint ratios. Iuppa said there could be many reasons for that. He acknowledged that complaints are important to regulators because they alert states to problems that may warrant an investigation into their market conduct.

But the association’s ties to the industry require it to walk a tightrope between consumers and insurers.

Although the association is made up of state insurance commissioners, it is supported by fees paid by insurers. It doesn’t file tax records as a non-profit organization because it considers itself an instrument of the states. Yet the association’s records aren’t open to the public because it considers itself a private organization.

Of the last 15 presidents, 11 have gone on to work in the industry they once regulated, either as insurance company executives, lobbyists, attorneys or trade group leaders. Some got top jobs at New York Life, SuisseRe, Blue Cross Blue Shield and the Property Casualty Insurers Association, a leading insurance trade group.

Cathy Weatherford, a former Oklahoma commissioner and now the association’s chief executive, said the complexity of insurance finances, rules and regulations means it’s only natural the private sector will seek out former regulators.

Weatherford doesn’t believe regulators or the association is biased in favor of the industry.

“I’ve never been in a room where people say, ‘Do what’s good for the industry,’ ” she said.

But Weatherford and most insurance commissioners agree that, in some cases, what’s good for the industry is good for consumers.

When regulations are coordinated among states, the burden of complying is lessened. Companies can offer more products at better prices.

Said Iuppa: “The goal is to have a single set of standards, to address the needs of the industry and consumer protection.”

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