NAIC - Market Conduct

  • 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

  • G. Criteria for Collaboration
    • The following questions are designed to assist states with the determination of whether an issue is appropriate for collaboration.
    • Regulators are encouraged to review these questions whenever there is an issue of concern raised that involves a regulated entity that does business in many states.
  • ^^If there is not a reference available from the NAIC Research Library or NAIC Market Regulation Department, your concern is not likely going to impact other states.

2011 1207 - NAIC/FIO Meeting on Market Conduct - 83p

  • 1980-1, NAIC Proceedings - Market Conduct, Examination and Reporting (B) Committee
  • 1988-2, NAIC Proceedings - Market Conduct Surveillance (EX3) Task Force
  • Our Lexington report alluded to the controversial issue of nonguaranteed policy element illustrations.
  • Currently, the issue is being addressed by four different groups:
    1. this task force;
    2. the Life Insurance (A) Committee's Cost Disclosure Task Force;
    3. the American Academy of Actuaries Task Force on Nonguaranteed Elements; and
    4. the American Council of Life Insurance's Subcommittee on Cost Comparisons.
  • For this reason, subsection 14(b) should await the consensus of opinion on this issue at the December meeting.  (p137)

--  Report of the Market Conduct and Consumer Affairs (EX3) Advisory Committee- JUNE 22, 1987

  • ⇒  Rules Governing the Advertising of Life Insurance and
  • ⇒  Life Insurance Products Coupled with Annuities

1987-2, NAIC Proc.

  • 9. Staff Report on Review of Market Conduct Laws
    • John Mancini (NAIC/SSO) reviewed the background that led to the subcommittee being charged to "conduct a review of specific market conduct laws, including anti-rebating laws, that have been adopted by the states, identifying state variations from NAIC models most important provisions."
    • Mr. Bownes also expressed concern over this charge being overly broad and said he agrees that there may be little value in issuing a report that will point out the deficiencies of state laws with regard to market conduct.
    • Mr. Adkins said that he had requested that the subcommittee conduct this expansive study in response to sales and marketing practice violations over the last several years and to consumer
      desires for expanded market conduct enforcement authority.
    • Mr. Adkins (CIR) added that in the center's study, 12 provisions in the Unfair Trade Practices Act and 15 provisions in the Unfair Claims Settlement Practices Act were analyzed.

1996-1, NAIC Proc.

  • Market conduct emerged as a key issue in 1994.
    • Perhaps the biggest consumer protection story in all of 1994 was the role the NAIC played in the settlement with Metropolitan Life-complete restitution for consumers and $20 million in fines.
      • The NAIC coordinated, the states acted, and consumers came out victorious.
    • In 1995, we will be taking a hard look at the status of market conduct efforts.
      • Does it make sense to coordinate market conduct exams?
      • Are there ways we can further standardize ways of dealing with market conduct problems among the states?
      • Those questions and others will be addressed as 1995 progresses.  (p3)

--  Commissioner Lee Douglass, Arkansas Insurance Department, 1994 NAIC Vice President

1994 - NAIC - Annual Report - 28p

  • 1988-2, NAIC Proceedings - Market Conduct Surveillance (EX3) Task Force
    • (p182) - Upon further discussion, Nebraska and Virginia reported reluctance to share any information if it could not remain confidential.
    • It was observed, however, that most states regarded the information as publicly accessible either under their Freedom of Information Act or otherwise.
    • It was decided that the confidentiality issue would be addressed in greater depth at the subgroup's next meeting.
    • However, it was recognized that even if individual states would not be able to share their data bases, the development of a uniform software program for utilization by the states would still be a very valuable tool.
  • 1980-1
    • Market Conduct, Examination and Reporting (B) Committee
      • Market Conduct and Trade Practices (B1) Subcommittee
      • Agents and Brokers (B2) Subcommittee, 
      • Competition (B3) Subcommittee
  • 1980-2
    • Market Conduct, Examination and Reporting (B) Committee
      • Market Conduct and Trade Practices (B1) Subcommittee
  • 1980-4
    • Market Conduct, Examination and Reporting (B) Committee
      • Market Conduct and Trade Practices (B1) Subcommittee
      • Agents and Brokers (B2) Subcommittee
      • Competition (B3) Subcommittee
  • (p13) - Life insurance: The coverage structure and company finances are notably different from other types of insurance.
    • Proportionately, market conduct problems with life companies are more likely to arise on the sales side and less likely to arise on the claims side, than in other lines of insurance.
    • There is significantly less interaction between the company and the consumer over the course of a customer relationship than with other lines of insurance and when market conduct problems do occur, they are often less likely to surface promptly in the form of consumer complaints.
  • (p13) - F. Other Useful Information
    • While complaint records and financial statements may be the most comprehensive and concentrated sources of data on market activity, there are many additional sources that should be reviewed in order to obtain the rest of the story. 
    • (p16) - Miscellaneous
      • (p17) - In addition, a review of recent insurance-related lawsuits can provide insight into consumer perceptions of market abuses and this information is publicly available.
      • Needless to say, market regulators should keep their eyes and ears open outside the office as well.
        • Valuable information can arrive in structured formats such as regulatory meetings, continuing education programs, e-mail discussion groups and clipping digests and also in less structured environments ranging from stories about lawsuits to interesting names in the news and chance remarks by acquaintances.
        • The more you know, the better equipped you are to ask the next question.
    • In addition, a review of recent insurance-related lawsuits can provide insight into consumer perceptions of market abuses and this information is publicly available.
  • Analyze known problem markets to evaluate likely causes:
    • Identify indicators that would shed light on the sources of the problems and suggest promising approaches for corrective action.
    • Develop data sources and methodologies that serve as triggers for further market conduct

2005 - NAIC - Market Analysis Handbook, Supported by: Market Analysis Working Group (MAWG) - 96p