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NCOIL May Work With Regulators On Market Conduct

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State insurance legislators have decided to defer action on a proposed Market Conduct Annual Statement Model Act.

Members of the National Conference of Insurance Legislators, Troy, N.Y., put off acting on the model here at NCOIL’s spring meeting. State lawmakers held off after many life and property-casualty insurance producers talked about their concerns with the current system.

NCOIL members said they hope to work with state regulators to develop a joint approach to market conduct that will lead to national uniformity in state producer licensing laws and rules.

The state legislators took steps to work more closely with state insurance regulators despite industry concerns about a competing model law proposed by the National Association of Insurance Commissioners, Washington. The competing model law would permit the NAIC to create a central registry set up in such a way that users could obtain information about state actions against agents for a fee.

The provision in the NCOIL model act would require that market conduct annual statement data and analysis be kept confidential and privileged.

The NCOIL model also would establish a system that state insurance commissioners could use to collect, analyze, and share MCAS data with other entities, including the NAIC.

The concerns expressed by agent groups were echoed by representatives of insurers and insurer trade groups.

John Gerni, a representative of the American Council of Life Insurers, Washington, talked about the “importance of uniformity” in any model law adopted by either NCOIL or the NAIC.

Speakers also talked about lack of true reciprocity in state producer licensing rules, duplicative licensing requirements, and variations in state background check rules and fingerprinting rules.

Groups sharing concerns about the current system at the NCOIL meeting included representatives of the Independent Insurance Agents and Brokers of America, Washington; the National Association of Professional Insurance Agents, Alexandria, Va.; and the National Association of Insurance and Financial Advisors, Falls Church, Va.

“Our inability to address this will add incentives for federal regulation,” warned Wes Bissett, a senior vice president at IIABA.

It would be counterproductive for NCOIL to have one licensing model and for the NAIC to have a separate one, Bissett said

David Epstein talked about problems with fingerprinting requirements and noted that the majority of PIA members are licensed to sell insurance in more than one state.

“Any system that would require fingerprints from both resident and non-resident applicants would be extremely burdensome and costly,” Epstein said. “Therefore, a secure method for sharing this information amongst our regulators is essential.”

William Anderson, a NAIFA vice president, recommended during the debate that all attendees support a federal bill that would create a National Association of Registered Agents and Brokers.

A NARAB bill passed in the House but failed to get through the Senate in 2008.

The battle over the competing market conduct models was prompted by the NAIC’s decision to move ahead with a transition plan that ultimately would centralize MCAS data storage at the NAIC’s offices in Kansas City, Mo.

Deirdre Manna, a vice president at the Property Casualty Insurers Association of America, Des Plaines, Ill., questioned whether a state insurance regulator has the authority to turn market conduct information over to the NAIC.

In addition, “we remain concerned with the NAIC’s ability and willingness to maintain certain information as confidential,” Manna said.

The NCOIL model, which was proposed by New York state Sen. James Seward, R-Oneonta, N.Y., the president of NCOIL, addresses industry concerns about the NAIC’s authority to collect market conduct data, Manna said.

“While authority and confidentiality are issues that lend themselves to a legislative fix, there are still a great many data integrity concerns that need to be addressed,” Manna said. “We welcome the opportunity to participate in an NAIC-sponsored working meeting to resolve these issues. Although there are many issues that must be resolved in order to implement this project, we are optimistic that all parties can set their sights on resolving these concerns.”


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