Recent industry discussions suggest that there is significant disparity over how to create a market conduct mechanism, a goal most support.
That disparity was highlighted both at a public hearing sponsored by the National Conference of Insurance Legislators, Albany, N.Y., and again during a discussion among regulators and insurers over how to proceed with a market conduct annual statement project currently being developed by the National Association of Insurance Commisisoners, Kansas City, Mo.
There is a “strong desire” on the part of trade groups to see NCOIL work in collaboration with the NAIC, says Tim Tucker, NCOIL director of state-federal affairs.
Whether or not a model market conduct law is developed by NCOIL is something legislators will need to discuss further and learn more about, he adds.
However, he did note that dialogue in Congress has suggested a need for action.
During the hearing, the American Council of Life Insurers, Washington, submitted testimony that said it would discuss the model law proposal with members. It also encouraged more immediate action such as encouraging insurer self-audits and using tools such as the NAIC Market Conduct Examiners Handbook.
ACLI said in its testimony that deficiencies in the current system that must be addressed include efforts to better coordinate multistate examinations or reciprocal acceptance of an examination done by another state.
ACLI also expressed reservations over vesting a companys domiciliary state with primary responsibility for market conduct oversight because of concerns ranging from variation in state laws and regulation on privacy of examination work papers to the limited staff available to conduct examinations.
Among the speakers at the NCOIL hearing was Nebraska Insurance Director Tim Wagner.
Wagner heads up an effort at the NAIC for states to collaborate and accept company examinations conducted by a state of domicile. To date, five states are participating in these collaborative arrangements.
Speaking of the possibility of a market conduct model law, a possibility noted by a just-released Insurance Legislators Foundation report, “The Path to Reform–The Evolution of Market Conduct Surveillance Regulation,” Wagner says that at this point, it is “premature” to start drafting a model.
He adds that more dialogue is needed at both the upcoming summer NAIC meeting that starts on June 21 and at the NCOIL summer meeting next month. ILF is NCOILs research arm.
Wagner adds that a periodic examination of a company is “a better tool” than targeted examinations resulting from consumer complaints.
Wagner maintains that the domestic regulator should be responsible for the market conduct oversight of insurers.