'Conflicts' At NAIC? Regulators Ax Meeting Staff

Two employees have resigned and the remaining four employees were terminated, according to Mr. Beal. Several former meeting staff members who were contacted about the NAIC action said they had no comment.

NAIC President and South Carolina Insurance Director Ernst Csiszar said there were members of the meeting department "that [took action] that we considered to be unethical conduct," and "That won't be tolerated."

Mr. Beal said although its staff has been dumped, the department still exists and "we don't think that it will be disruptive to the national meetings, interim meetings or the educational seminars."

He said the NAIC dropped all the staff after an internal review of the department discovered "a violation of the NAIC conflict of interest policy." The investigation, Mr. Beal said, had commenced four to six weeks ago.

The result of the review found that staff had "inappropriately accepted incentives from outside vendors," Mr. Beal said.

The review centered on meeting planner points, he said. The NAIC has a policy restricting such activity, he added. Points generally are redeemable for free hotel stays or room upgrades.

When asked if all the six former staffers had accepted these points, Mr. Beal responded, "most of them were and there were problems in other areas."

"It was a matter of applying policy across the board and making sure that all employees receive equal treatment," according to Mr. Beal. "We are looking at internal controls to make sure that it doesn't happen going forward."

And, he added, the NAIC will make sure that going forward all employees have a "clear understanding" of the policy regarding rewards and perks.

When asked if the NAIC was considering outsourcing in 2003, Mr. Beal responded, "we weren't necessarily considering it early on."

But, Mr. Beal added, the organization always is looking for ways to conduct business more efficiently.

Mr. Connolly is senior editor at NU Life-Health edition