NAIC Adopts Short-Form Model Act

By E.E. Mazier

NU Online News Service, March 19, 10:59 a.m. EST, Reno,Nev.?State regulators have approved another measuredesigned to speed up the approval process for insurers'products.

The National Association of Insurance Commissioners ExecutiveCommittee meeting here passed the Property and Casualty CommercialRate and Policy Form Model Act.

The model statute provides that most commercial lines aresubject to an informal filing system for rates and to ause-and-file system for forms.

J. Stephen Zielezienski, assistant general counsel for theAmerican Insurance Association, headquartered in Washington, D.C.,hailed the vote, explaining that the short-form model legislationgives the insurance industry a unified "springboard" for furtherdiscussion at the state level.

At the same time, Mr. Zielezienski took issue with a provisionaddressing how a regulator can determine whether a particularinsurance market is competitive.

He indicated that this section is troubling to the AIA becauseit contains "subjective" standards that a regulator couldapply.

Nevertheless, Mr. Zielezienski declared that the "beauty" of themodel act is its "a la carte menu" structure.

By this he meant that because its various sections are notinterdependent, a regulator or state lawmaker can take one or morepieces out of the model act and fit it into his or her state's laws"as deemed appropriate."

In December, when a NAIC working group approved the model act,the group's chairman, Lee Covington, who is Ohio insurancedirector, noted that each state would have to determine how theshort-form model act fits into its particular statutory scheme.