NCOIL Delays Action On Market Conduct Model

WASHINGTON–State insurance legislators on Friday deferred action on a proposed Market Conduct Annual Statement Model Act, in hopes of working with state regulators on a joint approach leading to national uniformity for state producer licensing laws and rules.

Insurance legislators at the spring meeting of the National Conference of Insurance Legislators (NCOIL) made the decision after a chorus of representatives of life and property-casualty insurance producers outlined a plethora of concerns with the current system.

The state legislators acted despite strong industry concerns with a competing model law proposed by the National Association of Insurance Commissioners that would allow that group to create a central registry, where information about state actions against agents could be obtained for a fee.

The provision in the NCOIL model act they support over the NAIC model requires that market conduct annual statement (MCAS) data and analysis be kept confidential and privileged.

It also establishes a system whereby state insurance commissioners can collect, analyze and share MCAS data with other entities, including the NAIC.

Concerns voiced by agent groups were supported by representatives of p-c and life insurance carriers and trade groups, who use both the independent and captive agent models to distribute their products.

Producer groups voicing concerns about the current system at the NCOIL meeting included representatives of the Independent Insurance Agents and Brokers of America, the National Association of Professional Insurance Agents, and the National Association of Insurance and Financial Advisors.

Wes Bissett, a senior vice president of the IIABA for state affairs, warned about the urgency of the situation.

“Our inability to address this will add incentives for federal regulation,” he told the legislators, noting that while the technology exists for uniform standards, there is a lack of true reciprocity, as well as duplicative licensing requirements in each state in which an agent does business.

He also said it would be “counterproductive” for NCOIL to have one licensing model while the NAIC has a separate one.

Speaking about the disparity in fingerprinting requirements, even though the technology exists to make them uniform, David Epstein of PIA said the majority of its members are licensed to sell insurance in more than one state.

“Any system that would require fingerprints from both resident and nonresident applicants would be extremely burdensome and costly,” he said. “Therefore, a secure method for sharing this information amongst our regulators is essential.”

William Anderson, a National Association of Insurance and Financial Advisors (NAIFA) vice president, voiced support during the debate for federal legislation recreating the National Association of Registered Agents and Brokers. That legislation was introduced in the last Congress and passed the House in late September. But there was no companion bill in the Senate.

The battle over competing models was prompted by the NAIC's decision to move ahead with a transition plan that would ultimately centralize MCAS date at NAIC offices in Kansas City, Miss.

Deirdre Manna, vice president of industry and regulatory affairs at the Property Casualty Insurers Association of America, told the NCOIL legislators of PCI's concerns with the NAIC initiative–explaining why PCI supported the NCOIL model as proposed by Sen. James Seward of New York.

“Throughout the process, the insurance industry expressed two major concerns with the initiative,” Ms. Manna said. “We have always questioned whether a state insurance regulator has authority to turn over the market conduct information it receives from insurers to the NAIC.”

Second, she said, “we remain concerned with the NAIC's ability and willingness to maintain certain information as confidential,” adding, “Some of the information the NAIC wants to collect is sensitive and confidential in nature.”

The NCOIL model responds to industry concerns regarding NAIC authority to collect market conduct data, she said.