NAIC, NCOIL, ACLI Weigh In On GAO Market Conduct Report

NU Online News Service, Oct. 9, 2003, 9:24 p.m. EDT – Groups representing state lawmakers and state insurance regulators disagree with the American Council of Life Insurers, Washington, about the implications of the new General Accounting Office report on insurance market conduct exams.

Officials at the National Association of Insurance Commissioners, Kansas City, Mo., and the National Conference of Insurance Legislators, Albany, N.Y., say the GAO report supports their efforts to improve state regulation, but an ACLI executive says the report could be used as a base for considering federal oversight.

GAO officials write in the report that a lack of a consistent approach is slowing efforts to make market conduct oversight more effective.

The officials cite a report from the National Association of Insurance Commissioners, Kansas City, Mo., that indicates that, in 2001, several states used on-site exams to review the market conduct of fewer than 2% of the states’ licensed companies.

The GAO officials also note that market conduct exam rates vary widely. When the officials talked to insurers, they found that regulators had examined 19 insurers in the insurers’ offices a total of 106 times during a three-year period. But two companies that responded had not been examined since 1997, and four others had not been examined.

States need a mechanism that can help state legislatures and state insurance regulators adopt and implement minimum market conduct standards, the GAO officials write.

The GAO officials also recommend that the NAIC and states “give increased priority to identifying a common set of standards for a uniform market oversight program that will include all states.”

The NAIC and NCOIL have both been working on efforts to promote uniformity and streamline the market conduct exam process.