Insurers are hoping to put their prints on a proposed modelfingerprint law for industry members before it advances furthertoward adoption by state insurance regulators.

Depending on industry segment, insurers' reactions and languagethey seek to modify in the measure vary–some call it burdensome andunneeded, and others voice confidentiality concerns.

The model, titled the “Authorization for Criminal History RecordCheck” model act, is currently being considered by the MarketRegulation & Consumer Affairs (D) Committee of the NationalAssociation of Insurance Commissioners, Kansas City, Mo.

Life insurance producers are urging the advancement of afingerprint model act that would streamline the process of puttingagents' prints on file with states.

The model will help weed out “bad apples” by giving stateregulators access to FBI criminal history, said Michael Gerber,vice president and general counsel with the National Association ofInsurance and Financial Advisors, Falls Church, Va.

It will also streamline the fingerprinting process for producerswith “a printed once, then done approach,” he added. The model willencourage uniformity, Mr. Gerber continued.

And, Mr. Gerber said, it calls for sufficient confidentialityprotections to be established with a new NAIC central depositorythat is being anticipated as part of the model.

The model draft requires states to have a memorandum ofunderstanding ensuring confidentiality with any entity they shareinformation with.

It also states that “fingerprints and necessary identificationinformation sent by a state commissioner to the NAIC shall not besubject to a subpoena, other than one issued in a criminal actionor investigation, and shall be confidential, and not used in acivil action.

NAIFA said another benefit is that it encourages states toobtain electronic fingerprints for new resident producers whichwould allow them to obtain FBI criminal history information.

NAIFA added that in order not to slow down the model'sadvancement because of concerns over whether officers and directorsshould be part of this process, it would “not object” to a modellimited in application to producers while separating out theofficers and directors issue for further study.

The American Council of Life Insurers, Washington, in filedcomments, offered 10 reasons why any central depository should fallunder the purview of the National Insurance Producer Registryrather than the NAIC. The National Association of Mutual InsuranceCompanies also voiced concern over NAIC control.

ACLI in filed comments said NIPR control was agreed to in 2002;NIPR complies with the Fair Credit Reporting Act and state laws;fingerprint and repository costs will be kept low; and fingerprintcollection, storage and transmission are “not necessarilyregulatory functions.”

Michael Lovendusky, ACLI associate, said the Council would havecomfort with the criminal history record check of officers anddirectors if the central depository resides with the NIPR and notthe NAIC. It is “unclear” whether the confidentiality provisionsfor the central depository discussed in the model will beenforceable, he added.

In comments made in an interview with National Underwriter lastmonth, Andrew Beal, NAIC general counsel, explained that a decisionby the NAIC was made months ago to keep the fingerprint repositoryunder the auspices of the NAIC because of the confidential natureof the information being collected. It was decided that to ensurethat confidentiality, this information needed to be under NAICauthority, he said.

Don Cleasby, vice president, regional manager and counsel withthe Property Casualty Insurers Association of America, Des Plaines,Ill., said PCI continues to express concern over the authorizationof states to fingerprint officers and directors when suchfingerprinting was not required under the NAIC's certificate ofauthority and applications embodied in the ALERT program.

By authorizing states to conduct such fingerprinting, Mr.Cleasby said there is a concern that it will become a requirementamong states.

The second issue, he continued, is who controls the repository.While PCI wants it to be a one-step, one-stop process,” it would bebetter for regulators and insurers to have input through the NIPR,he added.

Wes Bissett, a senior vice president with the IndependentInsurance Agents and Brokers of America, Alexandria, Va., said hisorganization opposes the model because it would add “extensiveburdens and costs to the licensing process.”

With the opposition of agents, it is hard to imagine this modelgetting adopted in states, he said.

The “burden” would fall on producers, while officers anddirectors would not be subject to the same treatment, he said. Lifeagents who register with the National Association of SecuritiesDealers, Washington, would not be subject to the same statebackground check which he said is more strenuous than the NASDrequirement.

Over the last three years the fingerprint model has been underdiscussion, states have not been “clamoring” for it, and effortshave been lost to “adopt real reforms,” Mr. Bissett said.

NAMIC, in Indianapolis, commented in a statement that it isopposed to the regulators' proposed fingerprint model law becauseof the model's conflict with existing company licensing provisionsand concerns for confidentiality.

NAMIC Regulatory Counsel Marsha Harrison wrote the NAIC thatNAMIC favors either omission of officers and directors from thecurrent draft model act, or inclusion of a drafting note statingthe intent of the model is not to impose a new company licensingrequirement in states where fingerprinting is not currentlyrequired for those individuals.