NAPA, CALIF.–The National Conference of Insurance Legislatorshas approved a revised market conduct model surveillance act thatattempts to eliminate some regulatory discretion when it comes toinsurance company examinations.

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NCOIL's action came Friday at the organization's annual meetinghere.

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The revision effort stemmed from the state lawmakers'dissatisfaction with the current model, which was crafted with aneye to meeting regulators' concerns and securing joint sponsorshipwith the National Association of Insurance Commissioners.

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But lawmakers said the fact that the model has garneredvirtually no interest in state legislatures indicated that it wastime to go back to what they were originally seeking in terms oflegislation.

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The revised model strengthens requirements that commissionersrecognize other states' rights to oversee market conduct of thecompanies domiciled in their state under a concept known as“domestic deference.”

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An amendment proposed by the American Council of Life Insurerscurbs the right of a commissioner in a carrier's state of domicileto reject the findings of another state's market conduct probe onceif they initially agree to the inquiry.

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It also mandates that any such investigation or examination beconducted on the basis of some market analysis data, and not simplyat the discretion of the commissioner.

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Iowa Insurance Commissioner Susan Voss, who is also chair of theNAIC Market Conduct Committee, was at the NAPA meeting and signedoff on all the changes, asserting they were in the spirit of theefforts her committee was undertaking to streamline the marketconduct system.

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But she expressed little enthusiasm for taking the reviseddocument back to the NAIC for joint approval, as the originalcompromise model was approved by a divided NAIC plenary body.

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Neil Alldredge, senior vice president for the NationalAssociation of Mutual Insurance Companies, said the new bill was animprovement, and his group would actively support it in stateswhere it would represent an improvement over the current system

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Unlike the last effort, consumer groups played a small role indeveloping the new model.

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