NCOIL Model Law Would Keep Market Conduct Data Confidential

By R.J. Lehmann
A.M. Best
March 3, 2009


States would be required to keep data culled from the market conduct annual statement confidential and privileged, under a model law set to be considered by the National Conference of Insurance Legislators at their summer meeting in Philadelphia.

Introduced at the group's spring meetings in Washington by NCOIL President James Seward, a Republican state senator from New York, the model law comes in response to a National Association of Insurance Commissioners proposal to centralize market conduct annual statement data collection at the NAIC. "No state legislature has required any fundamental changes in this area, or authorized them for that matter, and it's questioning the NAIC's statutory authority to move forward with this type of data collection," Seward said.

The model act, currently before the NCOIL's State-Federal Relations Committee, would establish a system governing how and when states could share the data with one another and with any third parties. Industry groups have raised red flags about the NAIC's potential plans, including concerns about the integrity of the data and that sensitive information be kept confidential.

"We have always questioned whether a state insurance regulator has authority to turn over the market conduct information it receives from insurers to the NAIC," said Deirdre Manna, vice president of industry and regulatory affairs with the Property Casualty Insurers Association of America. "Second, we remain concerned with the NAIC's ability and willingness to maintain certain information as confidential."

NAIC President Roger Sevigny, the New Hampshire insurance commissioner, said the proper collection of market conduct annual statement data is one of two major charges currently before the group's D Committee, and denied that any final determinations had yet been made on how such data would be treated.

"There have been no final decisions on the market conduct annual statement and the process. As a matter of fact we agree with making sure we have data integrity, that we have the appropriate data, that the rules are uniform," Sevigny said.

In September 2008, the full NAIC membership, or plenary, voted to back a transitional market conduct annual statement plan for 2009 under which the 29 states that have agreed to participate would report company data to a central repository at the NAIC (BestWire, Sept. 26, 2008). Over the next year, the NAIC will begin to aggregate and analyze the data, develop technological tools for that purpose and assess state-by-state differences in confidential disclosure laws.

A second measure passed by the NAIC essentially establishes 2010 as the target date for full implementation of the controversial plan and expands it to all NAIC states and jurisdictions. The NAIC plans to hold discussions at this year's national meetings to address details of the implementation.

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