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Insurance Law

Interstate Compact Update

  By Jeff Kulesus, FLMI, Consultant, Milliman, Inc.

Last summer Milliman conducted a survey to better understand the dynamics behind insurance industry participation in the Interstate Insurance Product Regulation Compact (IIPRC or Compact).

At that time, 67 insurance companies were registered with the Compact. By the end of 2009, that number had increased by 10% to 74 companies. As of April 2010, 82 companies have registered with the Compact, representing an increase of more than 22% in the number of IIPRC registered insurers since last summer.

There has been a corresponding increase in IIPRC submissions from 2009 to 2010. By the end of April 2009, 45 Compact submissions had been filed compared to an estimated 90 filings by the end of April 2010. This represents a 100% increase in 2010 Compact filings over 2009.

Last fall the IIPRC announced the two-year "Mix and Match" time limit had been eliminated. The news was received favorably by the industry. In December 2009, the SERFF enhancement designed to satisfy state insurance regulator Mix and Match documentation concerns was released. Although the update included a "hot link" that allowed populating Mix and Match data fields with previously filed SERFF information, insurers still found entering information into the data fields cumbersome, as well as time consuming.

Responding to industry input, the IIPRC developed a proposal for a new SERFF release which may become effective as early as September or October 2010 and help alleviate frustration with the 2009 Mix and Match SERFF enhancement.

Meanwhile, the Compact has allowed filers to add Mix and Match information after the initial submission and prior to approval. This gives insurers several weeks additional time in which to prepare the Mix and Match documentation without delaying initial Compact Mix and Match submissions.

Shock waves were felt last fall when Missouri petitioned to opt out of Standard Number IIPRC-A-07-I-2 for general account MVA products.  Both the insurance industry and the IIPRC wrestled with the question of Compact Standard effectiveness if states opted out of IIPRC Standards at will. Eventually, all Compact states including Missouri accepted the general account MVA Standard, so the "opt out Rubicon" has yet to be crossed.

One of the biggest Compact questions is when will large premium volume states such as California, Florida, Illinois, New Jersey and New York join the Compact. Current projections indicate that at least one of these states may join the Compact by the end of 2010. Progress is also being made in other states such as Arkansas, Nevada and Oregon. These states, however,  do not have new legislative sessions until 2011 thereby delaying enabling legislation until next year, at the earliest.

The Interstate Compact has a solid team in that is producing positive results as evidenced by increased submissions as well as company IIPRC registrations. It is believed that the Compact will only improve as the IIPRC, insurance regulators and the insurance industry gain greater experience in the cooperative Interstate Compact effort.

Jeff Kulesus is a Consultant for Milliman, Inc. He may be reached at