The National Association of Insurance Commissioners has decided not to move forward with its own version of the Market Conduct Surveillance Model Act, but instead to make recommendations to the National Conference of Insurance Legislators model law. At its recent executive committee meeting, the commissioners voted to work for a unified approach to the market conduct model, even if it has to be amended again by the state legislatures that pass it next year. The NCOIL model act originally was adopted in late 2003, and the NAIC was considering creating its own model based on the legislators’ version.

The market conduct model is one piece of a comprehensive program to create a better system of market conduct regulation, which would include a market conduct examiners’ handbook, collaborative interstate efforts of 20 states, the appointment of market conduct coordinators in each state, and a data call project. The program encompasses market analysis, collaboration, and uniformity.

Discussion continues over whether the model should be worded so that changes to a handbook for market conduct would be automatic when the NAIC makes changes or whether action would have to be taken by state legislators in each state, according to Joel Ario, the NAIC’s secretary-treasurer.

The American Insurance Association is urging the commissioners to refrain from making any substantive changes to the NCOIL model. “While a few of the NAIC changes truly are technical in nature, several of them are not,” said Laura Kersey, AIA assistant vice president, northeast region. “For example, the latest NAIC revisions eliminate any reference to self-evaluative privilege legislation and weaken the NCOIL model’s intention to provide a right to a hearing if the NAIC changes a work product. These provisions already have been fully vetted by insurers, consumer representatives, and NAIC representatives during the drafting process for the NCOIL model.”