States Begin Review Of NCOIL Model

A two-week time frame set to make changes in time for a March 31 hearing by the House Financial Services Committee on federal insurance regulation is "probably unrealistic," noted Joel Ario, the NAIC secretary-treasurer and Oregon administrator who has been spearheading NAIC market conduct efforts. Mr. Ario advised that the group take time to make sure everyone's views are heard and that NAIC's version of the NCOIL document receives broad support. Mr. Ario set a June deadline for getting the NAIC to officially weigh in on a market conduct model.

Among the concerns expressed during the discussion was wording in the NCOIL adopted model that might limit commissioners as far as their authority to act in terms of market conduct action. It would be "inappropriate for a statute to tell a commissioner what they can and cannot do," Mark Presser, a regulator in New York, said.

Another discussion focused on "real" market conduct problems instead of "random errors" such as failing to date-stamp a document. One regulator, however, felt that date-stamping was not trivial, but necessary for completing his market conduct work.

The issue of one state accepting a market conduct report from another state was brought up as well as the importance of domestic deference?where one state conducts a market conduct exam and other states defer to that report. They discussed setting a minimum standard of competency for a state's market conduct program before it can be received by other states.

Confidentiality also was discussed. Regulators expressed concern that information such as financial statements that are currently public might be treated as part of a confidential market conduct report. They noted that these documents should not be swept under the "confidential documents" rug.

Tim Tucker, NCOIL's director of state-federal affairs, cautioned regulators to stick to technical rather than substantive changes if "the greater goal?a framework for states"?is to be preserved.