SAN FRANCISCO–Property-casualty insurance industryrepresentatives have expressed concerns at the National Associationof Insurance Commissioners meeting here about the NAIC's newprocedure for developing model laws.

The trade groups said they fear there is confusion in theprocess about the status of guidelines that will be put at a levelbelow a law but could still be treated as such in certaincircumstances.

Process changes were first announced last month and areundergoing their first challenges here at the NAIC's summermeeting.

Regulators and industry lobbyists were not quite sure how theprocedure, which requires the Executive Committee and the parentcommittee to approve any new model law effort before it isundertaken, will impact the proposed Reinsurance Evaluation Office(REO), which is an amendment to the model Credit for ReinsuranceAct.

At the Saturday meeting, the Reinsurance Task Force voted to goon with REO efforts despite the fact that the parent FinancialCondition Committee and the Executive Committee have yet to approvethe required changes.

“We are in a little bit of an awkward stage right now,” saidAndrew Beal, NAIC deputy executive vice president and chief legalcounsel.

With every state having a Credit for Reinsurance Act and thegreat interest in settling the controversy by the senior NAICleadership, it seems highly likely that the REO would not meet thenational criteria, according to regulators.

Reinsurance Task Force members have yet to decide whether or notto scrap the current model and include the REO effort in itsrestructuring, or merely focus on amending the current model withan eye to modifying the 100 percent collateral requirements foralien reinsurers to operate in this country.

Before any proposal is put before the Executive Committee on apreliminary basis, presumably task force members would have tosettle on an amendment or full-scale revision approach.

“This is an interesting question. I have never heard anyonediscuss it,” said Neal Alldredge, senior vice president of theNational Association of Mutual Insurance Companies.

At the Executive Committee on Saturday, several life sectormodel laws or amendments were approved along with aproperty-casualty one related to medical malpractice data.

The Property-Casualty Committee has decided to turn proposedmodel laws dealing with independent adjuster regulation andprosecution standards for automobile fraud participants intoguidelines, not proposals for new state statutes.

This new category of guidelines concerns David Snyder, assistantgeneral counsel of the American Insurance Association, who feelsthat their uncertain status could be used by regulators or evenplaintiff's bar attorneys as almost-law since they were approved bythe NAIC body.

“In addition, if these proposed new models get preliminaryapproval, it will in a sense give them a leg up in the process andgive an unfair advantage to its proponents,” he said.

Consumer representative Birny Birnbaum with the Center forEconomic Justice in Austin, Texas, said that with the two-thirdsapproval required of both the Executive and parent committees, atiny percentage of regulators have veto power over development ofsuch models.

He said he feels that the requirement that all such models inthe future have relevance in all 50 states will preclude a lot ofneeded legislation that may have relevance in significant parts ofthe nation but not all sections of the country.