WASHINGTON–A controversial program to monitor insurers' marketconduct was affirmed by the National Association of InsuranceCommissioners during its fall meeting here.

The MCAS (market conduct annual statement) was one of a numberof items that state insurance commissioners made official NAICpolicy. Others included a model regulating the use of titles thatlife insurance agents employ to describe themselves.

Also adopted were a medical professional liability closed claimsreporting model, a reserving guideline for variable annuities and amodel regulation to implement Medicare supplement standards.

By far the most contentious of the measures that were adoptedwere the MCAS and the medical professional liability models, eachreceiving extensive debate by commissioners voting on theissue.

Two versions of the MCAS were adopted by commissioners. Combineddetails of the two models affirmed by the NAIC include provisionsthat have been discussed such as a state-specific data requirementthat would be stored by the NAIC and require discussion foradditional data elements. A transition period in 2009 would becreated and filing for 2010 would start in 2011.

The commissioners left open whether data would be collectedthrough the annual statement or through a state's market conductprogram. One reason cited was that data that could be developedunder existing market conduct authority would be more “robust” thanit might be under an MCAS.

Industry representatives from major insurance trade groups,including the American Insurance Association, Washington; theNational Association of Mutual Insurance Companies, Indianapolis;and the Property Casualty Insurers Association of America (PCI),Des Plaines, Ill., slammed the vote.

Deirdre Manna of the PCI said that the process was not an openone because it was done behind closed doors at a commissionersgathering in Chicago.

“It does not meet the NAIC's own open meetings policy,” shesaid. Industry never saw the transitional proposal, she noted.There is no way to know if the discussion accurately reflected thecommissioners' meeting in Chicago because many commissionersexpressed differing opinion as to what went on in that meeting, Ms.Manna added.

It was the first time that industry had heard of thetransitional proposal and there was no indication to industry thata vote was going to be considered, she continued.

The AIA's Dave Snyder said, “closed-door decision-making tendsto lead to poor decisions, and this is a classic example of wherelegitimate concerns are swept aside.”

Marsha Brown of NAMIC expressed surprise at the NAIC action,saying that there are still unknowns with the proposal such as howthe information will ultimately be gathered.

While insurers had opposed the proposal, consumerrepresentatives assert that the MCAS is critical to understandingand improving the insurance marketplace.

A Medicare supplement standards model was adopted by the NAIC.The model was prompted by a change in federal law which created newstandards prohibiting insurers from using genetic informationagainst insureds. Regulators were required to create standards toreflect this change or, if they failed to do so, have the federalgovernment develop its own standards.

The medical professional liability closed claims model drewquestions about whether states had stronger reporting requirementsthan the model and whether insurance regulators when asked by statelegislators or the General Accounting Office for information wouldbe able to readily access data to provide answers on the medicalliability market.