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Model Laws In Legislative Pipeline

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Model laws adopted by the National Association of Insurance Commissioners are being taken up in state legislatures around the country.

Among the models being introduced in state houses are the Interstate Insurance Product Regulation Compact model law, changes to the Producer Licensing model act, and the Actuarial Opinion and Memorandum model regulation.

The compact, according to the NAIC, is enacted in 9 statesColorado, Hawaii, Iowa, Maine, New Hampshire, Rhode Island, Utah, Virginia and West Virginia. It is under consideration in 22 more.

During a recent discussion on the issue, Colorado Insurance Commissioner Doug Dean said at least 13 states have introduced the compact into legislation in this session and New Jersey has carried a bill forward from last session.

Alabama has reintroduced the compact bill and Arkansas anticipates introducing it, but representatives for both insurance departments say they anticipate resistance from the Trial Lawyers Association. The remarks were made during a discussion of the NAICs compact implementation task force. In Montana, constitutional questions are also expected to be raised by trial lawyers, according to a discussion among regulators.

Dean also says insurance departments introducing the compact will need to educate legislators. The National Conference of State Legislatures, Denver, has stated that it will help with that process.

Indianas senate adopted the compact bill in a 47-1 vote on Feb. 28, says Jim Atterholt, Indianas acting commissioner. The compact will go through the house committee process starting in the next week or two, he adds. The version that is advancing is the NAIC version with the “full force and effect” wording, according to Atterholt. A previous attempt had been sidetracked because legislators had sovereignty concerns, he says.

In Kansas, S.B. 268 is expected to be reviewed before the session ends in April, while in Nebraska there has been some concern about ceding power, according to regulatory discussions.

But in North Carolina, Pennsylvania and Texas, compact bills are moving forward, regulators say.

And, according to the Troy, N.Y.-based National Conference of Insurance Legislators, the states of New York, Nebraska and Texas have introduced the NCOIL-NAIC Market Conduct Surveillance model law, and Florida, Michigan, Rhode Island and Vermont are expected to introduce it this year.

NCOIL notes that research from the National Association of Mutual Insurance Companies, Indianapolis, suggests that states are addressing the issue but with different wording and approaches. For instance, it says Californias proposed regulation would require that a broker find “the best available insurer.” In Oregon, a law in development prior to New York Attorney General Eliot Spitzers investigation of Marsh & McLennan would address minimum terms of compensation arrangements between insurance producers and customers.

Separately, in 2005 the Actuarial Opinion and Memorandum regulation became effective in two new states, Alaska and Wisconsin, according to Van Elsen Consulting, Pella, Iowa. They join 9 states and the District of Columbia in which AOMR became effective in 2004. Those states are: Alabama, Colorado, Florida, Indiana, Iowa, New Mexico, North Carolina, North Dakota and Virginia.

Three other states, Kansas, Louisiana and Texas, plan to adopt the AOMR, according to Van Elsen Consulting.

The AOMR model allows an insurer to get and use an actuarial opinion in its state of domicile for use in other states. However, commissioners could still ask for a separate actuarial opinion.

Reproduced from National Underwriter Edition, March 4, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.