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NAIC Adopts Market Conduct Model

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The National Association of Insurance Commissioners, Kansas City, Mo., has adopted a market conduct model law by a 31-20 vote here at its fall meeting.[@@]

The NAIC’s Market Conduct Surveillance Model Act is a revised version of a model adopted in February by the National Conference of Insurance Legislators, Albany, N.Y.

NAIC members changed the model to ease some regulators’ concerns that the model would restrict their ability to perform market conduct work. NCOIL had warned that it would adopt its original model if the NAIC failed to adopt the revised version of the model at the meeting in Anchorage.

Many of the elements in the model are incorporated in a new regulatory reform bill proposal released Aug. 19 by U.S. Reps. Michael Oxley, R-Ohio, and Richard Baker, R-La. Some have viewed streamlining the market conduct process as a way for state insurance regulators to demonstrate the effectiveness of state insurance regulation.

During discussions about the model, Jorge Gomez, Wisconsin insurance commissioner, said he still thinks some model provisions would make it more difficult to take market conduct action against companies.

The model would give insurers the right to challenge statutory authority of examinations and require desk examinations, as opposed to on-site examinations, Gomez said.

Gomez also asked whether hiring a young examiner might violate a model provision that requires insurance departments to hire qualified staff. He said his department does not have the staff to handle the litigation that might result from conflicts over examiner qualifications.

Joel Ario, Oregon insurance administrator and NAIC vice president, responded by emphasizing the model’s reliance on market analysis. He also noted that a recent call for data on credit scoring will be the target of a lawsuit, and he said that shows that the industry can sue even under the current rules.

Before the vote on the model, regulators also asked about whether lawsuits could be brought against commissioners and their representatives for initiating market conduct actions.

Following the vote, Tim Tucker, an NCOIL representative, said that work to get the joint NCOIL-NAIC model adopted would begin right away. He said the model was introduced last session in Nebraska and New York. Bruce Ferguson, a representative for the American Council of Life Insurers, Washington, said the ACLI prefers the version of the model that NCOIL approved in February.


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