Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Portfolio > ETFs > Broad Market

Uniformity In Market Conduct Pushed

Your article was successfully shared with the contacts you provided.


When regulators, insurers, and consumer advocates meet next week to shape what market conduct oversight will look like in the future, the need for uniformity will be a common point of interest that many say they plan to emphasize.

A public hearing is scheduled during the summer meeting of the National Association of Insurance Commissioners in New Orleans. Insurers and consumer advocates are scheduled to offer their feedback to three papers that regulators have issued.

Those papers address: the overall goal of market conduct exams with an emphasis on focusing limited department resources in the most needed areas; whether there should be a market analysis model that would include, among other things, a market conduct annual statement; and whether a zone approach should be used.

Uniformity was raised both by insurers and Kevin Hennosy, a consumer advocate and executive director of in Kansas City, Mo.

A redesign, Hennosy says, should start with a uniform market conduct annual statement including very basic data that would be compiled in an NAIC database and could be used to run statistical tests that would identify companies that were outside industry norms. That would not necessarily mean that it was a good or bad finding, but that it was outside of what is standard, he explains.

Using that as a base, Hennosy says regulators could make inquiries about why there was a difference from the norm and then determine whether a targeted exam was needed.

Hennosy believes there should be market conduct standards that are part of an accreditation program. Uniformity is needed, he says, because there are state variations on points as basic as what constitutes a complaint.

Uniformity is also a thread running through a paper prepared by the American Council of Life Insurers in Washington.

“It crosses all lines of the market conduct discussion. A first step is a level of uniformity and consistency across all states,” says Linda Lanam, vice president and chief counsel-state relations with the ACLI.

For instance, market conduct zone exams, which will be a point of discussion during the hearings, could work well if there is uniformity, says Bryan Cox, director-state relations with ACLI. But “it is a hodge-podge system right now,” he adds.

Cox says an annual market conduct filing similar to the “blue book” financials filed with departments could help make the process more uniform.

It would allow states to use its market conduct resources to identify “true problem areas,” he says.

Property-casualty trade groups say that their members are interested in some points of the proposal, but that more details need to be provided. There is a general feeling that a 12-point list of suggestions on how to streamline state regulation could be used to develop an effective market conduct system. Among the 12 points are that market conduct exams should be more targeted and costs of exams should be watched.

Reproduced from National Underwriter Life & Health/Financial Services Edition, June 4, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

Copyright 2001 by The National Underwriter Company. All rights reserved. Contact Webmaster


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.