San Francisco — The National Association of Mutual Insurance Cos. (NAMIC) is joining the chorus of those opposing a proposal from the National Association of Insurance Commissioners (NAIC) to aggregate market conduct data.

NAMIC issued a statement in advance of NAIC’s quarterly meeting in San Francisco condemning the proposal, which would compel insurers to submit market conduct data as part of their annual statements to the NAIC.

The proposal has been approved by the NAIC’s Market Regulation and Consumer Affairs (D) Committee, and now goes to the Executive Committee and Plenary. It would require insurers to submit market conduct data to the NAIC, where it would be housed in a centralized data bank. NAMIC says the proposal would violate the laws of most jurisdictions and potentially harm consumers as well as companies.

“This proposal raises serious legal issues,” says Neil Alldredge, NAMIC’s VP for state and regulatory affairs. “Additionally, there are questions about the confidentiality of the data that must be addressed.”

There are only three states in which the examination statutes do not impose confidentiality requirements on such materials or make confidentiality permissive, NAMIC and other industry trade associations pointed out in a letter to NAIC President Sandy Praeger. One of those states, New York, is considering legislation to make such materials confidential in most circumstances.

“The data being collected now is done for regulatory purposes,” Alldredge says. “Going forward, the data should only be used for those reasons.”

Many state insurance departments require preparation of market conduct annual statements as part of their efforts to modernize and strengthen their analysis of insurers’ market conduct. The majority of states have passed statutes based on Model 693, an NAIC Market Conduct Surveillance Model law adopted four years ago.

“This proposal conflicts with the NAIC’s own model law on market conduct,” Alldredge says. “Public release of this data will increase litigation and not serve any real consumer interest.”

Among the main concerns among the insurers is the potential for the data to be released to the public, possibly leading to abuse among competitors and class action lawyers.

“Collecting market conduct data through annual financial statements is wrong,” Alldredge says. “It usurps legislative authority with no real benefit to consumers.”

Source: National Association of Mutual Insurance Cos.

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