Market Conduct

  • 1974 - Strengthening the Surveillance System : final report, McKinsey & Company, Inc, - 126p
  • 1981 - Background paper on the status of the regulation of market conduct in the insurance industry, Brummond, David J., Sowka, M. Patricia - 17p
  • 1981-2, NAIC Proceedings - Survey of Industry Experience with Market Conduct Examinations, June 7, 1981  

  • 1995 - JIR - Symposium on the regulation of life cost disclosure and market conduct, Journal of Insurance Regulation - 48p
  • 1998 - Market Conduct: A New Actuarial Frontier, Society of Actuaries - 20p
  • 2003 0701 - NCOIL - The Path to Reform – The Evolution of Market Conduct Surveillance Regulation - 117p
    • Prepared for the Insurance Legislators Foundation by PricewaterhouseCoopers LLP and Georgia State University 
  • 2007 11 - NCOIL - A Study on State Authority: Making a Case for Proper Insurance Oversight - 147p
    • Prepared for the Insurance Legislators Foundation by James W. Schacht Managing Director Navigant Consulting, Inc. and SUNY 
  • 2012 - NAIC CIPR - The Market Conduct Analysis Framework - [LINK]
  • The NAIC Examination (A6) Subcommittee, in 1974, recommended the establishment of a "separate and distinct" program of surveillance to ensure fair treatment of policyholders.
    • Thus was "market conduct" born.
  • The term "market conduct" has, however, fallen upon bad times. 

1991-2A, NAIC Proceedings

Final Draft: Dec. 5, 1995

It is apparent that consumers place strong emphasis on market conduct regulation.

  • Dissatisfaction with perceived market practices has been the driving force behind the initiatives in a number of states.
  • It was a reaction to the constriction of the insurance marketplace in 1985-1986 that caused many to criticize the effectiveness of state regulation and call for federal involvement.
  • Consumer demands continue to place emphasis on this form of regulation.

1995-4, NAIC Proceedings

Problems spotted during a market conduct review can be a precursor to financial solvency concerns. 

NAIC Webpage,

Legal Actions

  • Monitoring of litigation may alert regulators to issues that the regulatory system has not yet addressed.

2008-3, NAIC Proc. 

  • Public interest in various aspects of insurance regulation has risen and fallen over its history, but one area that has remained obscured is market conduct regulation.

2001 - An Assessment of Insurance Market Conduct Surveillance, Robert W. Klein, James W. Schacht  - Journal of Insurance Regulation Vol. 20, No.1

  • Schwarcz / Vaughan - GOV- Emerging Issues?

More complex products sold to individual consumers (e.g., universal life policies) tend to generate more market conduct problems than simple products (e.g., term life insurance).

2003 0701 - NCOIL - The Path to Reform –The Evolution of Market Conduct Surveillance Regulation -  Prepared for the Insurance Legislators Foundation by PricewaterhouseCoopers LLP and Georgia State University - [PDF-117p]


  • Mr. DeAngelo <Commissioner-NJ> said he did not recall seeing incorrect or misleading training materials, so this is somewhat a theoretical question.
  • Mr. Hanson <Commissioner> responded that he had seen misleading materials in market conduct examinations. 

1999-4, NAIC Proceedings

c. Adopt Recommendation for Market Conduct Examination Oversight (EX3) Task Force as NAIC Standing Technical Committee

Commissioner Weaver asked Mr. Chartrand to review the proposal.

  • This need is particularly important as the subcommittee would continue to focus on issues of policy, law and model legislation while the new task force would be concentrating on matters directly related to the examination processes.
  • Mr. Synnott replied that he concurred and that he had already been approached by members of the industry interested in serving on such an advisory committee.

1991-1A, NAIC Proceedings

A preliminary meeting of the Market Conduct Task Force was held at the Zone III meeting in Springfield in October.

At that meeting there was a general discussion of the objectives which the task force should pursue.

 A number of possible areas for consideration in regard to market conduct examinations were mentioned, including the following:

  • 1. Examination funding standards,
  • 2. Examination skills relating to market conduct, for example, development of uniform standards to test market conduct performance,
  • 3. Revision of the NAIC Market Conduct Handbook,
  • 4. Creation of a system for surveillance of claims handling,
  • 5. Establishment of an "Annual Statement" for market conduct or some form of annual performance statement,
  • 6. Inquiry into alleged abuses of the market conduct examination process and ways to correct or prevent such abuses,
  • 7. Development of a questionnaire to survey Regulators and industry about concerns with market conduct examinations.  (p317)

1981-1, NAIC Proceedings 

  • Responding To Market Conduct Problems (Section VI)
  1. Self-Audits

States may monitor company self-audits. "Best practices" organizations or independent standard-setting organizations, such as IMSA in the life insurance industry, promote self-audits or self-evaluative activities and mandate corrective actions on the part of their members.

2005-2, NAIC Proc.

  • In its June 7, 1994 Consent Order #94-102, the NJDBI cited N.J.S.A. 17B:30-3 and N.J.A.C. 11:2-23.4 and subsequently fined MetLife $965,555 for MetLife’s practice of misrepresenting life insurance to be retirement or savings plans, particularly in advertisements sent to nurses and other professionals.

New Jersey MetLife adoptrptmetlife.pdf