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NAIC 2003 Summer Meeting Preview

The National Association of Insurance Commissioners (NAIC) is holding its summer meeting in New York City June 21 through June 24, 2003. Several issues of...
June 16, 2003

The National Association of Insurance Commissioners (NAIC) is holding its summer meeting in New York City June 21 through June 24, 2003. Several issues of interest to producers will be taken up including fingerprint based background checks through the FBI criminal databases, standardization of continuing education requirements, premium pass-through accounts, terrorism insurance implementation, speed to market, and market conduct.

In addition, NAIC's Consumer Protection Working Group will hold a second hearing on arbitration clauses in insurance contracts. The first was held at NAIC's spring meeting in March.

Insurance Scoring: The NAIC's Market Regulation and Consumer Affairs Committee had scheduled a meeting on insurance scoring but has now cancelled it, allegedly because the Committee has not yet decided how to proceed.  Insurance scoring is likely to be discussed at both the Consumer Liaison Committee and Industry Liaison Committee meetings, but neither committee has substantive authority. Both Committees are a forum for exchange of ideas among consumers, industry representatives and the NAIC leadership.

The Industry Liaison Committee may also discuss problems now arising in some states, which are denying producers and carriers access to MVRs on the basis of state privacy law restrictions.

Fingerprint Background Checks: One of the ways to protect the consumer, according to regulators, is to conduct thorough background checks of producers and key carrier personnel. As Congress has not been able to pass legislation that would permit NAIC to be the central authority for accessing FBI criminal background FBI databases, the states are attempting to obtain such authority on their own. Thus each of the 56 jurisdictions would have their own procedures. The states would not be permitted to share any of the FBI's background check information with other states, which would result in producers and certain carrier employees being subjected to multiple background checks.

PIA believes that what insurance producers do not need is a system of fingerprint background checks that varies substantially state-by-state, lacks uniformity, fails to protect against misuse of information and imposes an onerous, costly compliance burden on independent insurance agencies.

Market Conduct Examinations: Market conduct exams are another way for regulators to protect consumers. NAIC and the National Council of Insurance Legislators (NCOIL) began a dialogue on options for improving market conduct at NCOIL's hearing on June 6, and will continue the discussions at NAIC's Summer Meeting. One option to be discussed includes reciprocity agreements between states so that carriers would not be subject to multiple, state-by-state market conduct reviews. But reducing the number of market conduct reviews and reducing front-end regulatory approvals will require that such reviews be thorough and may include provisions for carrier self compliance reviews.

What It Means to Agents: The NAIC's main focus is on how to protect the consumer while improving regulatory efficiencies and enabling products to get to market more quickly than under the current system.

Questions should be directed to Ellen Sanders at ellensa@pianet.org or by calling 703-518-1363.