Orlando, Fla.–Insurance regulators meeting here have taken a step toward approving model legislation that requires fingerprinting of insurance agents, but exempts company executives.

Action on the revised proposal occurred during a committee session of the National Association of Insurance Commissioners meeting here, which also heard a preliminary industry report indicating regulators are doing fewer examinations of insurers.

The Market Regulation and Consumer Affairs “D” Committee after discussion sent the Fingerprint Model Act to the NAIC's Executive Committee and Plenary.

In earlier sessions regulators had balked at passing a fingerprint measure, but at this meeting Committee Chairperson Susan Voss and North Dakota Insurance Commissioner Jim Poolman unveiled a simplified model that won approval.

The new model will eliminate a proposed requirement that officers and directors of companies submit to fingerprint requirements that producers will face.

It also will not include provisions for a central repository for fingerprints housed with the NAIC. And, the stripped-down version of the model eliminates an exemption for those producers registered with the National Association of Securities Dealers, Washington.

The eliminated provisions had caused opposition among industry trade groups. Recently, when a previous request was made to advance the model, no motion was made by regulators on the committee.

In describing the changes, Mr. Poolman said that “everyone had added an ornament to the Christmas tree” to the previous measure and the simplified version of the model removed those ornaments.

The committee also heard preliminary results from trade groups' member polls on the effectiveness of the NAIC's market conduct analysis program.

Early findings are from 15 member companies or member groups, said Don Cleasby, vice president, regional manager and counsel with the Property Casualty Insurers of America (PCI), Des Plaines, Ill. Other PCI companies still need to submit results, he said, and the results of other trade groups still will have to be collected and reviewed.

To date, the preliminary data shows that there were 27 regulatory activities in 2003, 51 in 2004, and, 41 in 2005.

In 2003, the PCI survey indicated that the activities were broken out as follows: 2 correspondence, 4 targeted information gathering, 6 desk audits, 1 investigation, 5 targeted exams and 9 comprehensive exams.

In 2004, the breakout was as follows: 12 targeted information gathering, 2 policy and procedure reviews, 2 interrogatories, 8 desk audits, 1 self-audit, 10 targeted exams and 16 comprehensive exams.

And, in 2005, the results looked as follows: 1 correspondence, 8 targeted information gathering, 2 interrogatories, 7 desk audits, 2 self-audits, 1 investigation, 7 targeted exams and 13 comprehensive exams.

All of the reported targeted examinations, according to the PCI, were single state. Three of the comprehensive exams were multistate, and all others were single state.

Preliminary data, according to Linda Lanam, American Council of Life Insurers vice president-annuities, Washington, suggests the number of examinations have come down slightly.

There is some reduction in the total number of examinations, she continued, but there are still a significant number of them. But, she said information from a few more companies must still be collected and other information evaluated before a full report of the findings can be detailed.

The goal for both regulators and companies should be the same–namely how to improve companies' results when market conduct criteria are applied, said Ms. Lanam. She also voiced concerns about confidentiality of market conduct data.

Cate Paolino, American Insurance Association senior counsel, said that “an insurer should know what specific information triggers an examination, and it should have access to information about it within the NAIC databases.”

Special Reports /

Regulators Move Smaller Fingerprint Model

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