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Regulation and Compliance > State Regulation

GAO Not Sure Whether States Can Standardize Market Conduct Efforts

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NU Online News Service, Oct. 2, 2003, 6:11 p.m. EDT – The National Association of Insurance Commissioners, Kansas City, Mo., should give more priority to identifying a common set of standards for a uniform market oversight program that will include all states, according to a report released today by the General Accounting Office.

“These standards should include procedures for conducting market analysis and coordinating market conduct examinations,” the GAO says. “Further, NAIC needs to establish a mechanism to encourage state legislatures and insurance departments to adopt and implement standards.”

The GAO contends that, although states have market conduct regulation, “two key tools — market analysis and on-site examinations — are used inconsistently, if at all. The result is inconsistent and often spotty coverage from state to state and potential gaps in consumer protection.”

The GAO adds that “formal and rigorous market analysis” is in its “infancy among state regulators” and that state regulators take a wide array of approaches to performing the exams.

The GAO concludes that “it remains uncertain whether NAIC and the states can agree on and implement a program that will result in the standardization of market conduct regulation.”

The GAO report suggests that, although state regulators need to do more work, the regulators’ efforts are on the right track, according to Joel Ario, Oregon insurance administrator.

Ario is spearheading NAIC efforts to revamp the current system of market conduct regulation in state insurance departments.

The GAO report “confirms we are headed in the right direction,” Ario says.

The report mentions greater use of market conduct analysis and more collaboration among states, which regulators at the NAIC are undertaking, Ario says.

The only quarrel Ario had with a draft released at the start of the summer is that the draft overstated how far regulators still have to go, Ario says.

The GAO prepared the report for House Financial Services Committee Chairman Michael Oxley.

The GAO has posted the report at


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