GAO Rep Offers NAIC Some Insight On Market Conduct
During the winter meeting of the National Association of Insurance Commissioners here, a representative of the federal General Accounting Office offered his understanding of how to create a strong market conduct system.
An effective market conduct system has 3 components, said Lawrence Cluff, assistant director-financial markets and community investment with the GAO, Washington. These are a functional and comprehensive market analysis system; targeted examinations for those companies identified through market analysis; and a routine review of a companys internal controls, according to Cluff.
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State regulators are starting to take steps toward better market conduct oversight, he said.
A critical point, Cluff explained, is to understand the meaning of domestic deference, which he said means accountability rather than complete authority over other states.
The issue of domestic deference is one that insurers, regulators and legislators have been attempting to get a handle on as they create a market conduct system.