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NAIC Revises Model Law

On Insurer Market Conduct

The National Association of Insurance Commissioners last week released a revised draft of a model law to regulate insurers' market conduct.

Their changes follow a series of discussions by regulators on what the market conduct model framework for state legislatures should include.

NAICs model is an adaptation of the Market Conduct Surveillance Model Law adopted Feb. 27 by the National Conference of Insurance Legislators, based in Albany, N.Y. It arrived just prior to the March 31 insurance regulation hearing by the House Financial Services Committee. (See related stories about the hearing on page 8.)

One of the changes to the model reasserted a commissioner's authority to make decisions on market conduct matters.

The change relates to language outlining market conduct exams that specifically target individual companies for an on-site investigation, as opposed to a standard data collection and conduct review.

The new language states that when a commissioner determines that available market conduct actions are not appropriate, the commissioner can examine on-site market conduct in accordance with NAIC market conduct uniform examination procedures and the Market Conduct Examiners Handbook.

The new draft also addresses concerns raised over the treatment of confidentiality requirements.

Initially, the language stated that all information gathered in relation to a market conduct action or market analysis would be confidential and privileged and not be subject to a subpoena, and “shall not be subject to discovery or admissible in evidence in any private civil action.”

The change clarifies that the provision would apply to documents except “as otherwise provided by law or otherwise publicly available.”

The changes were the result of recent comments from regulators, insurers and consumer advocates.

Jim Connolly is a senior editor with NUs Life & Health edition.

Reproduced from National Underwriter Edition, April 2, 2004. Copyright 2004 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.

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NAIC Revises Model Law On Insurer Market Conduct

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