NU Online News Service, March 9, 2004, 5:57 p.m. EST – Some commissioners are not sure the National Association of Insurance Commissioners should be putting a new model market conduct law on a fast track for adoption.[@@]
The National Conference of Insurance Legislators, Albany, N.Y., quickly adopted the measure, the Market Conduct Surveillance model law, in response to complaints by trade groups and members of Congress about wide variations in state market conduct regulation.
The NAIC, Kansas City, Mo., will be considering the model law at its spring meeting, which starts March 14.
NAIC President Ernst Csiszar said today that the NAIC needs to act quickly to adopt the NCOIL model.
Csiszar noted that Rep. Michael Oxley, R-Ohio, the chairman of the House Financial Services Committee, and Rep. Richard Baker, R-La., another committee member, have both taken an interest in the topic, and that there may be a hearing on federal regulatory options March 31.
NAIC Secretary-Treasurer Joel Ario, the Oregon insurance administrator, said the model is “a good, solid effort that very closely tracks our efforts.”
But Wisconsin Insurance Commissioner Jorge Gomez suggested that the NAIC ought to hold more discussions about the model.
“What’s the urgency?” Gomez asked. “We don’t want to rush to judgment because Congress thinks we should do something before an election.”
Ario responded that the NAIC might not be able to adopt the model this year if the group tries to push back action to the June meeting and other debates about the model open up.
Other commissioners, Nebraska Director Tim Wagner and District of Columbia Insurance Commissioner Larry Mirel, emphasized the importance of a domestic deference provision in the current version of the NCOIL model.
The original provision would have required states to defer to the market conduct findings of an insurer’s state of domicile. The current version gives a state regulation the option of deferring to the findings of regulators an insurer’s state of domicile. NCOIL officials say the group plans to revisit the issue later.
Domestic deference is the only way that regulators will have something to offer in response to a report by the General Accounting Office that attacked variations in state regulation, Wagner said.
If regulators cannot point to a domestic deference provision, they “could be sadly disappointed,” Wagner warned.
Ario said NCOIL put off action on the domestic deference provision out because of arguments that domestic deference would not work for p-c insurers.
Property-casualty laws differ greatly from state to state, and some states have far more resources to oversee market conduct than others, Ario said.