NCOIL New Changes To Market Conduct Model

By Jim Connolly

NU Online News Service, July 19, 1:34 p.m.EDT?State legislators, after considering changes byregulators to their proposal for a model law to regulate insurer'smarket conduct, have accepted a key point after addingmodifications to deal with insurers' concerns.[@@]

The model changes were taken up Friday in Chicago at the summermeeting of the Albany, N.Y.-based National Conference of InsuranceLegislators. The modifications they dealt with were the work of theKansas City, Mo.-based National Association of InsuranceCommissioners.

As revised by the NAIC, the model would have the law followprovisions in the NAIC's Market Analysis Handbook. Insurers hadargued that this would deprive them of their right to due processbecause changes could be made to the Handbook language that alteredthe law without using the usual legislative procedure.

Insurers had raised concern that NAIC models or changes tomodels would become defacto law if the NAIC Handbook wasreferenced in the model and no opportunity to respond is offeredwhen changes were made.

According to the report from the meeting, three options wereoffered in the latest version of the model: public notice could begiven and the opportunity for a public hearing offered; anopportunity for an informational public hearing could be offered ifthere is a material change to a statute or administrative rule; or,notice and the opportunity for a public hearing would be offered ifany changes were necessitated to a statute or an administrativeruling or if a commissioner's actions deviated substantially fromNAIC work products.

The model would establish a market conduct framework that statescan adopt into law. The issue is considered important by many inthe industry because of the possibility of federal oversight ofinsurance.

Creation of a strong market conduct system is viewed as a way toreinforce the effectiveness of state insurance regulation.