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GAO-01-885R 1 (2001-07-06)

handle is hein.gao/gaocrptanqd0001 and id is 1 raw text is: i SGAO Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 July 6, 2001 The Honorable John D. Dingell Ranking Minority Member Committee on Energy and Commerce House of Representatives Subject: Regulatory Initiatives of the National Association of Insurance Commissioners Dear Mr. Dingell: As you requested, this report provides information on selected initiatives undertaken by the National Association of Insurance Commissioners (NAIC) to improve state insurance regulatory processes. NAIC developed these initiatives in response to provisions in the 1999 Gramm-Leach-Bliley Act (GLBA), Public Law 106-102, which mandated changes in insurance regulation, and to competitive pressures within the insurance industry. Our study was prompted by your concern that some of the initiatives may adversely affect regulators' ability to conduct proper solvency oversight of insurers, particularly in light of the regulatory weaknesses identified after the recent insurance investment scam allegedly perpetrated by Martin Frankel.' The specific objective of this report is to describe the current status of six NAIC initiatives intended to comply with provisions of GLBA and improve competitiveness in the financial services sector. Additionally, we will describe the status of actions that NAIC and some states have taken in response to recommendations contained in our September 2000 report. Throughout this report, we will also highlight challenges and areas that merit continued attention in NAIC's efforts to improve regulatory processes in the insurance industry. Results in Brief NAIC has undertaken an ambitious agenda of initiatives intended to streamline and promote uniformity at the state level. Under pressure from GLBA and insurance industry participants that are faced with increasing competition from firms in the banking and securities industries, NAIC and state regulators are working to implement these initiatives. For example, NAIC and the states are developing streamlined licensing systems that will allow agents and brokers to conduct business in more than one state after satisfying the licensing requirements administered by a single state. Another streamlining initiative seeks to develop a more uniform and efficient approach for 'We recently issued a report to you on this matter that included proposed corrective actions designed to shore up regulatory deficiencies revealed during the scam. See Insurance Regulation: Scandal Highlights Need for Strengthened Regulatory Oversight (GAO/GGD-00-198, Sept. 19, 2000). GAO-01-885R Regulatory Initiatives

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