Ft. Lauderdale, Fla.–State lawmakers at a meeting here said they will once again try and craft a market conduct surveillance model law with the aim of gaining broader acceptance in state capitals in the coming years.

The National Conference of Insurance Legislators State-Federal Committee will start with its original version of the model approved in February of 2004 and then modified to gain acceptance from the National Association of Insurance Commissioners, officials said.

But that jointly-backed legislation has not been approved in a single state, and much of the blame has been given to its lukewarm reception by the insurance industry at the time.

To gain NAIC backing, the NCOIL model was revised, in the view of some critics, to give too much latitude to regulators in conducting examinations.

“Right now, they have full discretion to conduct exams on any grounds but coffee grounds,” said Texas Rep. Craig Eiland, D-Galveston, who chairs the state-federal committee.

The model got only tepid backing from the NAIC itself, passing by a vote of 30-20 in the fall of 2004 because some regulators felt they were giving up too much for the sake of unity.

Mr. Eiland helped to shepherd through model conduct legislation in Texas, but it is the only conduct measure to pass any state legislature in the past two years.

Paul Donohue, NCOIL Washington representative, said that model was closer to the original, more industry-friendly February 2004 legislation, but with some modifications.

During the summer of 2004, then NAIC President Ernst Csiszar and his NCOIL counterpart, Florida Sen. Steve Geller, D-Hallandale Beach, made a great push for unity on the conduct issue.

They expressed the hope that this would demonstrate the states' capacity to regulate the market and impress federal lawmakers then crafting federal legislation to create uniform state insurance regulation. The measure pending in the House is known as the State Modernization and Regulatory Transparency Act.

NCOIL has since come out vigorously against the SMART Act, and the NAIC, while seen as more neutral, has not been that much engaged in the process.

But joint backing is of little value if it does not lead to enactment in any of the states of a uniform model, one lawmaker noted.

Both the Property Casualty Insurers Association of America and the American Insurance Association urged NCOIL to embrace the model recently passed in Texas as one that could gain national support.

Mr. Eiland said that practical experience with working under that model could be valuable in gaining support for it in other states.

He added that he hoped some action could be taken at the NCOIL July meeting in Boston after a task force looks at the provisions in the current joint model that may be removed to gain greater acceptance in the states and so interested groups can put forth their comments.

Special Reports /

NCOIL Revisits Market Conduct

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