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NCOIL Panel Amends Market Conduct Model

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A National Conference of Insurance Legislators (NCOIL) panel has deferred final action on a proposed Market Conduct Annual Statement Model Act until November.

The NCOIL State-Federal Relations Committee adopted several amendments at the group’s recent meeting in Boston, and committee officials believe their market conduct annual statement (MCAS) draft is complete.

“Our legislation should provide legal certainty for collecting and handling MCAS data,” says New York state Sen. James Seward, R-Otsego, N.Y., the model sponsor and the immediate past president of NCOIL, Troy, N.Y.

But the committee plans to wait until the NCOIL annual meeting to hold a final vote on the model.

The committee deferred the final vote until November in response to requests by the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., and other interested parties, officials say.

Market conduct rules are the rules that govern insurance marketing, sales and underwriting practices. Many states already require insurers to file annual statements giving information about a variety of consumer protection indicators, such as the ratio of replacement contracts issued to the total number of contracts issued, and the number of consumer complaints per 1,000 policies in force.

Consumer groups and lawyers who represent policyholders want state insurance departments to maximize public access to the market conduct information collected; insurers have argued for maximizing confidentiality, to help insurers protect details about their operations from competitors and avoid triggering frivolous lawsuits.

NCOIL began working on the MCAS model in 2009 to give regulators recommended rules for authorizing regulators to collect and share information, and to provide a framework for protecting the confidentiality of market conduct information, Seward says. The model would, for example, let state insurance commissioners share MCAS data with other entities, such as the NAIC, on a confidential basis.

Combined with an NCOIL Market Conduct Surveillance Model Law, the MCAS model should help promote regulatory uniformity across the states, Seward says.

Parties that have participated in debate on the model include the Center for Economic Justice, Austin, Texas, and America’s Health Insurance Plans, Washington.

The version to be considered in November includes a section defining the purpose of the model act to be to “enable the [insurance] Commissioner to collect Market Conduct Annual Statement (“MCAS”) data for analysis purposes.”

Before the State-Federal Relations Committee met in Boston, AHIP had asked that the purpose section state that, “The purpose of this Act is to ensure the confidentiality of Market Conduct Annual Statement (“MCAS”) Data the Commissioner shares with other persons and entities.”

The version approved in Boston also states in a section concerning scope that, “This Act applies to admitted insurers with direct written premium exceeding $100,000 in lines of business subject to NAIC MCAS.”

In drafts considered this spring, the committed had included a longer description of the types of products subject to MCAS reporting. The list included “life and annuity for individual life cash value products, individual life non-cash value products, group life products (cash and non-cash value), individual fixed annuities, individual variable annuities”; automobile insurance; homeowners and renters insurance; and “other linesof insurance the Commissioner determines…should be examined.”

At the November meeting, the committee will “continue discussing consumer access to company and market information,” says Alabama state Rep. Greg Wren, D-Montgomery, R-Ala., the committee chairman.

Allison Bell contributed information to this report.


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