Panel: Insurers Need Products To Get to Market More Quickly.

State insurance regulators are trying to find ways to reduce the time it takes to approve new insurance products to meet consumer demand.

The National Association of Insurance Commissioners launched a speed-to-market working group March 12 in Chicago as part of its overall effort to revamp insurance regulation.

"We are trying to respond to market conditions. This is a recognition of the evolution of the marketplace of the business of insurance," said NAIC President George Nichols, Kentucky's commissioner.

The issue ranks as the most important among insurers, according to a survey of chief executive officers by the American Council of Life Insurers.

Merle Pederson of the Principal Financial Group, Des Moines, Iowa, said insurers were squeezed by banks and securities brokers that develop noninsurance products quickly.

"Our customers are demanding new products every day," Pederson said. "And we're seeing banks and seeing security firms provide them with those products."

Commissioners serving on the working group have varying views about the process, but generally said they want to make it easier for insurers to roll out new products, while protecting consumers' rights and regulators' oversight of them.

"We ought to be moving to a file-and-use system on all lines," said District of Columbia Commissioner Lawrence Mirel. A file-and-use system allows insurers to sell products without getting prior approval from regulators.

Others suggested a certification process that would call for insurers to get product approval in one state, then certify that they meet requirements for other states. Michigan Commissioner Frank Fitzgerald, who co-chairs the committee, suggested that states could adopt uniform product standards, then allow one-stop rate-and-form filing that would allow for product approval nationwide.

The group also suggested allowing insurers to gain approval in their home, or state of domicile. Other states then could recognize that approval.

Consumer groups worry that the plan could allow insurers to release products that would hurt consumers. "You're resting so much power in the hands of the domiciliary state," said Kevin Hennosy of Spread the Risk Inc., a consumer group. "It tends to weaken the strength of the state regulatory system, which is peer review."

Delaware Commissioner Donna Lee Williams said states would retain authority over insurance products. "I don't envision a system that would preclude states from looking at a product that has been approved in a domiciliary state," she said.

Pennsylvania Commissioner Diane Koken, who also co-chairs the group, said the group hopes to come up with recommendations for new regulations or laws by the end of the year.

Koken suggested the group tackle life insurance products first, in part because they face the most direct competition from banks and securities firms.

It could take time for legislatures to warm to the idea. "We're not naive enough to think that we're all going to be able to change our statutes in a nine-month period" Koken said.