The politicians and unelected bureaucrats that inhabit Washington, D.C. have many talents. They take first place in turning serious issues into frivolous soundbites for the media, squandering taxpayer dollars, and handing down sweeping politically convenient policies for complex issues. The latest showcase of overreach out of the capital comes via a little-known group called the National Association of Insurance Commissioners (NAIC) and at the behest of an even lesser-known political activist named Philip Barlow.
The NAIC represents state insurance commissioners and acts as a quasi-government agency regulating the insurance industry. Recent NAIC efforts have focused on eliminating competition from the life insurance industry with Washington, DC’s Associate Commissioner for Insurance Philip Barlow leading the charge as chair of one of the NAIC’s key policy making groups. The NAIC and Barlow claim that certain investments are “too risky” and should face new requirements, which essentially amount to penalties that will make them less competitive in the marketplace and more expensive for consumers. Their efforts should infuriate Americans for multiple reasons.
First, the NAIC is allowing an unelected activist in Washington, D.C. to tell state-level regulators how to operate. Insurance markets already have oversight with regulators tasked with crafting policies on a state-by-state basis. These efforts are led in each state by insurance commissioners who are given their jobs by governors, state commissions, or voters. This makes the NAIC redundant and their decision-making inherently misguided as they attempt to dictate how insurance operations far beyond the ivory tower should operate. What’s more, there are no domestic life insurance companies in Washington, DC that would be subject to the standards Barlow engineers. Ironically, the only jurisdiction that would arguably be subject to his oversight does not have any insurers for him to oversee. It amounts to yet another member of the Washington, DC ruling class decreeing from on high how Americans in all 50 states must live.
Second, the current NAIC agenda directed by Barlow is driven by his own partisan goals, not what’s best for everyday consumers. Barlow’s policies would eliminate competition, which is unsurprising based on his past affiliations with the Green Party. Barlow has worked for the Washington, DC Department of Insurance for nearly 24 years and in his spare time is an avid art collector. He’s even been profiled by the Washington Post which reported in 2001 that Barlow had spent $120,000 on art throughout his life. The Post puts it best when they ask, “Who else but the filthy rich spends ten grand on something you can't drive or live in?” Barlow lives in a world divorced from the reality of most American families but creates regulations that will have real consequences for people struggling to put food on the table or afford gas on the way to work.
Ultimately, the NAIC and Barlow would limit options in the life insurance market to the detriment of consumers based on little evidence and biased assessment. They have targeted risk-based capital requirements which make sure that insurers can fulfill their obligations to policyholders. The NAIC and Barlow are targeting investments that have been around for years with a proven track record, but that are associated with private capital and newer market entrants. Barlow wants to shut down investments that he doesn’t like or understand. As part of this crusade, the NAIC has already adopted a 50 % surcharge on some of these investments. This was an explicit request addressed to Barlow directly from large, entrenched insurers to undercut new entrants and smaller competitors. This letter seems to have provided an almost too convenient opening for Barlow to pursue his long-awaited goal of injecting more subjectivity into the regulatory process and essentially creating a punitive charge for new and innovative investments the NAIC doesn’t like. The unelected, unaccountable staff at the NAIC are all too happy to help in this effort.
Misguided policies driven by a small pool of people who live in stark contrast to the rest of the country aren’t new. But what’s now at stake is the financial security of countless Americans outside of Washington, DC’s bubble. Life insurance plans and annuities help people plan for retirement and ensure that their loved ones are taken care of in the worst circumstances. The NAIC and Philip Barlow need to wake up and realize that they don’t know what’s best for most Americans and stop pushing their out-of-place partisan agenda.
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