Changing The Market Conduct Model:
How Much Is Too Much?
The debate on the overhaul of a market conduct model law is centering on how much change is too much.
Advocates of a market conduct model developed by state legislators and currently being adjusted by state insurance regulators are saying that change needs to be substantial.
But other parties to discussions currently being held by the National Association of Insurance Commissioners, Kansas City, Mo., are saying that insurance commissioners should not be asked to give up tools they already have to make sure good market conduct practices are followed.
The debate centers on changes to the Market Conduct Surveillance Model Law adopted by the National Conference of Insurance Legislators, Albany, N.Y., on Feb. 27.
The discussions raised the issue of whether requirements under the new model would be in conflict with existing statutory requirements. For instance, a question was raised that the definition of targeted examinations in the model does not encompass statutory requirements.
In response, Joel Ario, NAIC secretary-treasurer and administrator of the Oregon insurance department, responded that the definition would not encompass such requirements if the exam was not a part of the market analysis.
Another issue was raised over what a regulator would do if a state required examinations every 3-5 years and the new model took a targeted exam approach.
Ario explained that the new law would supplant existing laws regarding market conduct oversight.
But, Joel Laucher, a California regulator, said he thought the wording in the current draft did not preclude examinations other than targeted examinations tied to market conduct analysis being conducted.
Laucher noted that John Garamendi, California insurance commissioner, would not support “any law that would tie his hands and have him do less than he does now.”
Texas Commissioner Jose Montemayor, however, said he did not believe the model would diminish his authority to act and said he supports the current draft.
Laucher explained that problems do not necessarily show up in consumer complaints and that a commissioner needs all remedies available to prevent abuses.