NU Online News Service, Nov. 4, 2003, 7:33 p.m. EST – Debate about a proposed market conduct model law is opening up a discussion about how to balance consumer protection, state regulatory authority and burdens on insurers.
State insurance legislators now are fine-tuning a draft of the Market Conduct Surveillance Model Law, which is being developed by the National Conference of Insurance Legislators, Albany, N.Y.
The model will receive further discussion at NCOIL’s annual meeting in Santa Fe, N.M., which runs from Nov. 20 to Nov. 23.
UnumProvident Corp., Portland, Maine, is one of the organizations that have commented on the draft model.
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The company says uniformity is important. It reports that, because of public allegations, it has had as many as 14 states conducting simultaneous market conduct exams of its companies. Recently, the company adds, three of its domestic regulators have announced that they will conduct a coordinated multistate market conduct examination and that a total of 42 states will participate.
UnumProvident contends that examiners are interpreting “access” to include information that normally would be covered by the attorney-client privilege.
Another topic UnumProvident raises is the use of third-party contractors. UnumProvident maintains that use of outside contractors is leading to an “exponential” increase in costs. In one case, examination fees exceeded $1 million for a single state exam, UnumProvident says.
Trade groups also are talking about the cost of contract examiners. The Life Insurers Council, Atlanta, is one of several trade organizations that urged that the NCOIL model law include tighter contractor cost controls.
The LIC recommends that there be a requirement for regulators to solicit bids, according to LIC Executive Director Scott Cipinko. The LIC, like other industry trade groups, also wants the model to include provisions for an appeals process.