The National Conference of Insurance Legislators (NCOIL) leadership said before the Executive Committee of the National Association of Insurance Commissioners (NAIC) that after more than four years of examination, NCOIL has concluded that a model law for market conduct reform is essential.
Rep. Kathleen Keenan (Vt.) and Sen. Steven Geller (Fla.), who serve as NCOIL president and vice president, respectively, delivered their remarks during the NAIC Summer Meeting in New York City. Both legislators also hold the same positions on the board of the Insurance Legislators Foundation (ILF), NCOIL’s educational and research arm.
“Along with eliminating prior approval for insurance rates, market conduct reforms are the top priority for achieving a reformed system of state regulation to govern the property and casualty industry,” said NAMIC’s Vice President of Regulatory Affairs Roger Schmelzer. “NAMIC feels strongly that these reforms have to be established by state legislatures for implementation by insurance commissioners. We have worked very closely with the NAIC to develop their market conduct initiatives, but the public policy objectives must be set out by statute if we are to get any closer to fundamental change.”
“NCOIL’s leadership in providing guidance to state lawmakers is a very positive step, especially on the heels of their successful efforts to bring a thoughtful solution to states on insurance scoring,” added Schmelzer. “We will be engaging our members to determine recommendations for NCOIL as to the content of their model.
Rep. Keenan stated, “The NAIC’s efforts to improve market conduct regulation are laudable. However, NCOIL believes that the development of a model law is necessary in order to create meaningful and lasting reform. Without statutory underpinnings, interstate agreements or other initiatives to reform market conduct regulation will last only as long as the policymakers who signed it remain in office or until they change their minds.”
“NCOIL is committed to working with the NAIC on the development of comprehensive market conduct reform model legislation,” said Sen. Geller. “The time to act is now, and we must do so without delay. It is our hope that our two organizations can be partners in this important effort.”
Geller continued, “NCOIL feels strongly about the need for enactment of holistic market conduct statutes in the states and it will likely begin drafting model legislation shortly.
Such model legislation could include recommendations from the preliminary report, which include:
* domiciliary state primacy over market conduct regulation
* a national complaint database
* guidelines for imbedded insurer compliance programs
* CEO self-certification of compliance
* targeted market conduct exams
* recognition of and rewards for self-critical analysis
Keenan said that “The NAIC has taken a proactive approach to market conduct reform. In fact, many NAIC initiatives closely track recommendations for improving market conduct regulation in the recent ILF preliminary report.
“Public policymakers involved in insurance regulation agree market conduct reform is a cornerstone of insurance regulatory modernization. To that end, creating a more streamlined and uniform insurance market conduct regulatory regime has been a top priority for both the National Conference of Insurance Legislators (NCOIL) and the National Association of Insurance Commissioners (NAIC). NCOIL and the Insurance Legislators Foundation (ILF) more than four years ago recognized the inefficiency and redundancy in market conduct regulation and set an aggressive path for reform. Over that time, the ILF has produced two reports on the state market conduct system that have been touted as landmark reviews of this important regulatory function,” concluded Keenan.
The Phase I report, entitled Insurance Market Conduct Examination Public Policy Review, released in July 2000, was an in-depth analysis of the current market conduct regulatory structure.
The Phase II preliminary report, entitled The Path to Reform – The Evolution of Market Conduct Surveillance Regulation, identifies the shortcomings of the current market conduct regulatory structure and makes recommendations for improvements.
Topics Legislation Market
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