By
A proposed market conduct model law is prompting a discussion on how to balance consumer protections, state regulatory authority, and costs and administrative burdens on insurers.
State insurance legislators currently are fine-tuning a draft of the Market Conduct Surveillance Model Law being developed by the National Conference of Insurance Legislators, Albany, N.Y.
The model will be discussed further at NCOILs annual meeting in Santa Fe later this month.
UnumProvident, Portland, Maine, was one of a number of entities commenting on the draft model.
The company says uniformity is important. It explains that because of public allegations, it has had as many as 14 states conducting simultaneous market conduct exams of its companies. Recently, UnumProvident adds, three of its domestic regulators announced they will conduct a coordinated multi-state market conduct examination and that a total of 42 states would participate.
One of the "troubling" trends UnumProvident cites is the use of third-party contractors, which it maintains is leading to an "exponential" increase in costs. UnumProvident says that in its case, examination fees exceeded $1 million for a single state exam.
The company also is concerned that examiners are interpreting access to include information that it says would be covered normally by the attorney-client privilege.
Trade groups also are expressing concern over the cost of contract examiners. The Life Insurers Council, Atlanta, was just one of a number of trade organizations that urged tighter controls be put in the model.
LIC recommends that be a requirement to solicit all potential bids, says Scott Cipinko, LIC executive director. The recommendation also reflects other trade groups in that it calls for specificity of billed items as well as an appeals process.
The American Council of Life Insurers, Washington, suggests that the purpose of the model should be to establish a state-of-domicile approach using market analysis for conducting targeted exams that are coordinated among states.
The model should also include a provision that would allow states with significant market share of a company to conduct market conduct activities if a state of domicile does not have the resources to perform that function.
