Insurance legislators now are reviewing comments before a new round of drafting that could result in a market conduct law that would be a framework for regulation.
The National Conference of Insurance Legislators, Albany, N.Y., is in the process of developing a model law, The Market Conduct Surveillance model act.
Insurers offered comments on issues such as domestic deference, due process and confidentiality Jan. 16 following an industry gathering.
In a joint trade group letter, insurers recommended removing a domestic deference section until the issue could be better examined.
Due process for insurers who believe a commissioners action extends beyond the bounds of regulatory authority is a point insurers say they conceptually support. However, the use of arbitration to ensure due process is a remedy several trade groups still are vetting before members, they say.
Insurers also offered language that they say would ensure confidentiality of company information so that it would be considered “confidential by law and privileged” and “shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action.”
Language in the recommendations offered by insurers encompasses a simple concept of domestic deference that allows a state, if it chooses, to accept the market conduct findings of an insurers state of domicile, says Linda Lanam, vice president-annuities with the American Council of Life Insurers, Washington.
But more work is needed to determine how to coordinate examinations in which a nondomiciliary state, rather than simply accepting the work of a state of domicile, wishes to participate in the exam or to examine compliance with laws or regulations that may differ significantly from domiciliary states, she adds.
As states adopt the model, the wording providing for optional domestic deference will allow life insurers to encourage states to take advantage of the option for life insurers, whose business is more national than state-specific in scope, she explains.
Lanam says the inclusion of definitions created and offered by insurers is important for ensuring uniformity if the model is enacted in a state.
Creation of definitions is important, concurs Scott Cipinko, executive director of the Life Insurers Council, Atlanta. The reason, he explains, is that there can be different understandings for a term and if a term is defined in a drafting note, that note might be omitted by some state legislatures.