NCOIL Defers Formal Action on Proposed Amendments

At its recent meeting, the National Conference of Insurance Legislators (NCOIL) deferred formal action on proposed amendments to its Personal and Commercial Lines Regulatory Modernization Model Act.

The Model Act, adopted at the Summer 2001 NCOIL meeting, was designed to enhance state regulation of insurance by supporting a “use and file” rating approach, allowing more authority for state regulators on given lines of insurance in non-competitive markets.

An NCOIL Subcommittee plans to review the proposed amendments to the Model that include changes on the use of credit reports, informational filing for commercial coverages and trade secret protections at its March 2002 meeting.

Robert L. Zeman, National Association of Independent Insurers (NAII) vice president and assistant general counsel said that, “NAII remains committed to preserving the model’s original intent to safeguard state regulation but is hopeful that discussions involving all interested parties, including the Independent Insurance Agents of America (IIAA), will yield a satisfactory result.”

In addition to regulatory modernization, NCOIL adopted a resolution on the terrorism insurance legislation, calling upon Congress to reach agreement on a federal backstop for property/casualty terrorism coverage.

“We commend NCOIL for adhering to the principles supported by the NAII for any proposed terrorism insurance which include that any backstop legislation be limited in nature and temporary as well,” Zeman said.

NAII said that in other major developments NCOIL postponed passage of two proposed model laws addressing class action reform at the state level.

“The first package primarily consists of pieces designed to assure that regulators have exclusive authority over the business of insurance and that adherence to the guidance or specified rule of any administrative agency, including the insurance department, should be evidence that compliance is legal and should not be the subject of a private cause of action,” Zeman explained.

Zeman said that members of NCOIL objected to the models arguing that there should be another panel or investigational hearing before proceeding with a model. NCOIL’s State-Federal Relations Committee agreed to hold the model, but only until the 2002 Meeting.

The other model law proposal would support the National Association of Insurance Commissioners’ (NAIC) Uniform Certificate of Authority Application (UCAA) as the exclusive vehicle for insurance company licensure. This proposal also was postponed until further discussions are held at the spring 2002 meeting.

“NAII strongly supports NCOIL’s resolve in passing models on class action reform and again plans to be involved in the discussions that take place before the spring meeting,” Zeman said.

NCOIL also delayed adoption of its proposed CAPA Model law, a model that supports the use of aftermarket parts in auto repair through accreditation under the Certified Automotive Parts Association (CAPA).

“Although the CAPA model law passed the Property/Casualty Committee, the NCOIL Executive Committee stopped action until they re-convene in 2002,” Zeman said. “NAII supports this model which would give added credibility to lawmakers in the states where the use of aftermarket parts is often challenged.”