On April 17, the NAIC's Market Regulation and Consumer Affairs (D) Committee approved and sent to the Executive Committee a proposal to have the NAIC collect and collate insurer market conduct information developed by the states, and to make that information publicly available. Specifically, the proposal would require states that collect information on the Market Conduct Annual Statement (MCAS) to submit that information as part of the Annual Statement Blank. The Executive Committee announced plans to hold a final vote on the proposal at the June meeting in San Francisco.
The problem is that market conduct information is confidential under the laws of most states, and the MCAS report, which contains information considered by insurers to be private and proprietary, has always been considered confidential. The Annual Statement Blank, on the other hand, is a public document containing information on an insurer's financial health. The NAIC's top lawyer asserted that were the information reported on the Annual Statement Blank, it would no longer be confidential. It is how information is reported rather than its content, the NAIC lawyer said, that determines its treatment under state law.
This was alarming news to the insurance industry, which came together seeking to bar the (D) Committee proposal. It also disturbed state legislators who had enacted laws based on an NAIC model or a similar model developed by NCOIL, requiring confidentiality for market conduct information. Wiley Rein was retained by the American Council of Life Insurers (ACLI) to develop a legal memorandum pointing out the difficulties with the (D) Committee proposal. That memorandum became the basis of a letter to the leadership of the NAIC, signed by the six largest insurance trade associations, that asked that the (D) Committee proposal not be approved. Copies of the letter were sent to all NAIC and NCOIL members.
In response to the resulting furor, NAIC president Sandy Praeger postponed the vote scheduled for San Francisco, but rescheduled it for an early July conference call. Another industry letter was sent, along with a detailed Wiley Rein legal analysis showing that most commissioners who adhered to the (D) Committee proposal would probably violate their state insurance laws. Once again, the vote was called off. At a meeting of NCOIL in New York in mid-July, the delegates voted unanimously to request the NAIC to delay the vote still further.
The (D) Committee and its consumer advocate allies are now pressing for a vote on the proposal at the fall NAIC meeting in Washington. Insurers, fearing that the centralized collection and public disclosure of market conduct information would prompt meritless class action law suits and reveal proprietary business information and insureds' personal data, will work to defeat the proposal or to encourage a dialogue with the NAIC over information protection in any centralized data collection program.