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An official of the National Association of Mutual Insurance Companies (NAMIC) said Tuesday that his organization agrees with a General Accounting Office (GAO) preliminary report that says state regulators need to do more to adopt and implement common standards for market analysis and market conduct examinations.
“The GAO’s testimony before the Subcommittee on Oversight and Investigations only serves to reinforce our concerns that unless the NAIC can develop these common standards, any hope for meaningful market regulation reform is a moot point,” said NAMIC’s market regulation manager, David Reddick.
Reddick was reacting to the testimony of Richard Hillman, director of Financial Markets and Community Investment before the Subcommittee on Oversight and Investigations of the House Committee on Financial Services. Rep. Sue W. Kelly, R-N.Y., chairs the Subcommittee.
Reddick also said that NAMIC agrees with chairwoman Kelly’s assessment that there needs to be more effective and less duplicative market conduct regulation.
“State regulators have made some efforts in the past year in developing more uniformity in the examination process, but there needs to be more discussion about alternative ways to oversee the marketplace without resorting to simply calling for an examination,” continued Reddick.
“As a strong proponent for reforming the insurance market conduct examination process, we urge that legislators move away from ‘routine’ market conduct exams and to focus their attention on ‘targeted’ exams that address the most problematic company practices,” said NAMIC’s Federal Affairs vice president, Monte Ward.
NAMIC worked with a joint industry trade group to develop recommendations that formed the basis for the market conduct exam “best practices” ultimately adopted by the regulators.
In April 2001, NAMIC published a 38-page paper entitled, Market Conduct Regulation for a Competitive Environment, in which it argued that “reform of the market conduct process should have two fundamental goals – to increase regulatory efficiency and to implement a remediation program.”
NAMIC published another public policy paper in April 2002 entitled, Regulation of Property/Casualty Insurance: The Road to Reform, in which it argued that “states must adopt a new market surveillance program, operating under the premise that most insurance companies
are in business to treat their policyholders fairly, and only companies that violate that trust should be pursued and punished.”