AIA Urges NAIC to Make No Substantive Changes to NCOIL Model Market Conduct Law

June 14, 2004

The American Insurance Association has urged the National Association of Insurance Commissioners not to make any substantive changes to the Market Conduct Surveillance Model Law developed by the National Conference of Insurance Legislators (NCOIL).

“The NAIC has made several modifications to the NCOIL model which we believe seriously erode the intent and purpose of the original measure,” stated Laura Kersey, AIA assistant vice president, northeast region. “Consequently, AIA does not support the NAIC revisions, and if the organization votes to adopt its own model during this weekend’s meeting, we will oppose using it as a substitute for the NCOIL model,”

Kersey explained that “while a few of the NAIC changes are truly technical in nature, several of them are not. 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 have already been fully vetted by insurers, consumer representatives and NAIC representatives during the drafting process for the NCOIL model.

“Another example is the issue of domestic deference, which is very important to AIA members,” she continued. “The NAIC has replaced the NCOIL model’s reference to this issue with the term ‘interstate cooperation and coordination,’ and we believe they should reincorporate the original domestic deference language. This is a very crucial topic and we are committed to working toward an acceptable solution for the property-casualty industry.”

“AIA is very encouraged that the NCOIL model, if adopted by the states, would help to bring uniformity and consistency to the market conduct process. In the interest of moving forward with market conduct reforms, we urge the NAIC to adopt the NCOIL model verbatim, or at least adopt a position in support of the original version of that model,” Kersey concluded.

The NAIC’s summer national meeting began on Saturday June 12 in San Francisco. It is scheduled to conclude on Tuesday, June 15.

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