No More Secret Goodies For NAIC Bosses
By Jim Connolly
National Underwriter News
March 14, 2005
Salt Lake City Utah -- Top leadership of the National Association of Insurance Commissioners who accept expensive meals courtesy of a lobbyist must now reveal such dining enjoyments and other rewards, regulators here have agreed.
The information would be disclosed under a Conflict of Interest Disclosure policy for commissioners on the NAIC executive committee that was unanimously adopted after a discussion of whether or not the price of a dinner needed to be disclosed.
Pennsylvania Insurance Commissioner Diane Koken said that while commissioners were under no obligation to buy their own dinner, they would be under an obligation to disclose that they had received a dinner if it was over $50.
The new policy will require all NAIC executive committee members to sign an annual acknowledgement and disclosure statement that will require them to disclose any known activity that could be perceived as a conflict of interest and any activity relating to a family member—including a spouse, parents, siblings or children—that could be construed as a conflict of interest.
Disclosure would be required for any benefit over $50. Disclosures will not be public documents since the NAIC is a 501(c)3 organization, and disclosure statements will not require that a commissioner report fund-raising proceeds for reelection bids since those efforts are not related to NAIC activities, said Andrew Beal, NAIC's general counsel.
Many insurance commissioners already sign state conflict-of-interest agreements that prohibit them from accepting gifts of any substance.
Conflict of interest, under the new policy, is defined as “any activity, transaction, relationship, service engaged in or consideration received by the executive committee member, the member's immediate family or someone in the member's immediate household which may cause an objective person reasonable concern that the member could not or may not be able to perform his responsibilities and duties to the NAIC in an impartial manner.”
The policy statement says further that conflicts of interest include but are not limited to direct financial or close personal interests in an entity or organization which could be affected by a decision of the NAIC; acceptance of a valuable gift, entertainment, service, loan or promise of future benefits including offers of employment from any organization that may benefit because of the commissioner's connection with the NAIC.
Commissioners expressed support for the proposal but also said that they wanted clarification of requirements concerning relatives and meals received during quarterly meetings to make sure that they do not violate the new conflict-of-interest requirements.
Ohio Insurance Commissioner Ann Womer Benjamin expressed concern over the provision that would require reporting potential conflicts of interest of family members. The concern, according to Ms. Benjamin, was both what would be considered a conflict of interest and how to track the activities of a family member. For instance, she asked, if a sister attended a party of an insurance executive, would that be deemed a conflict of interest?
Montana Insurance Commissioner John Morrison said that it was important to clarify a “gray area” of accepting meals from insurance lobbyists of more than $50 a plate during quarterly meetings. If a meal was accepted during the year, would a new disclosure agreement have to be submitted in addition to the one submitted at the start of the year? he asked.
Georgia Insurance Commissioner John Oxendine said that the new requirements should be put in writing so that commissioners would have a clear idea of what was and was not permitted.
Both Ms. Koken and Wisconsin Insurance Commissioner Jorge Gomez said that a commonsense approach to the new requirement was needed. Ms. Koken said that since the NAIC was trying to put in place corporate governance requirements, the officers felt strongly that it was important to put in disclosures for NAIC members. The NAIC is currently considering changes to its Model Audit Rule that would strengthen corporate governance requirements for insurance companies.
Washington Insurance Commissioner Bill Kreidler said that Washington state public officials are not allowed to accept even a cup of coffee from industry representatives and that a conflict-of-interest statement is appropriate.