There is general agreement that market conduct oversight of insurance activities can be made better, but wrestling with the details continues to be the task at hand, according to interviews.
Toward that end, insurers, regulators, legislators and consumer advocates gathering this week for the winter meeting of the National Association of Insurance Commissioners will tackle the issue and discuss a model law that legislators say will establish good market conduct standards.
This is being driven by federal legislators and regulators who say action needs to be taken. The call for action was echoed recently in a report issued by the General Accounting Office.
Joel Ario, NAIC secretary-treasurer and Oregon insurance administrator, cites 3 pillars that are important to market conduct oversight: market analysis through the effective use of data, uniformity and collaboration among states.
Ario says the NAIC market analysis handbook, a compilation of tools that regulators have been using to monitor market conduct, is now ready for use. Regulators efforts to use data calls in market analysis are making strides, but the idea still needs further testing, he adds.
Any market conduct reforms should retain a commissioners authority to make a decision on a market conduct issue, Ario says.
On the issue of domestic deference, which allows the state where a company is domiciled to take the lead on market conduct matters, Ario says a modified approach is evolving. Such an approach allows nondomiciliary states flexibility to take action on issues that a domestic state is not acting on, he continues.
Domestic deference is an issue that will receive more review as the National Conference of Insurance Legislators, Albany, N.Y., moves its Market Conduct Surveillance model law toward an anticipated adoption in February 2004, says Tim Tucker, NCOIL director of state-federal affairs.
Nancy Davenport, senior counsel and director, Northeast region, with the American Council of Life Insurers, Washington, says the NCOIL model is making good progress, but the issue of domestic deference still needs to be discussed. Questions such as whether a larger state would enact a model law with domestic deference need to be answered, she continues.
Also, Davenport says, definitions of terms such as complaint and significant premium volume are needed in order to ensure uniform market conduct treatment among states.
Of NAIC efforts, Linda Lanam, ACLI vice president-annuities, says that while there is general agreement market analysis should be part of market conduct reform, the benefits of the current data call project are not clear.