Regulators Hear Variations On Market-Conduct Exams.

NEW ORLEANS -- Insurance commissioners heard presentations of three concept papers outlining different approaches to improving market-conduct regulation.

Regulators from Oregon, Ohio and Nebraska drafted the following three proposals:

* Market analysis--targeted market-conduct examinations based on analysis of data, such as complaints, NAIC databases, regular meetings/ communications, Internet monitoring, news media, economic and other data.

* Key market-conduct priorities-- identifying issues that have the most impact on consumers (such as claims or life insurance replacement and suitability), focusing limited resources on target exams of all companies and coordinating with other states that may have conducted exams.

* Zone exams--periodic and comprehensive market-conduct exams of every insurer that conducts business on a multistate basis.

Tim Wagner, the Nebraska insurance director who drafted the zone approach, said his proposal would reduce redundancies among the states.

"What I am concerned about is...every state coming in and doing the same thing," he said. "What market-conduct exams must be about is how are companies treating people."

Joel Ario, Oregon insurance administrator, drafted the market-analysis approach, and Ohio Insurance Director Lee Covington drafted the key priorities concept paper.

Property/casualty insurers said the three proposals offered several good ideas, but they needed more information on each. The industry pushed its 12-point program to improve market-conduct exams.

"You don't need to reinvent the market-conduct program. You can make some improvements," said Don Cleasby of the National Association of Independent Insurers.

Consumer advocate Birny Birnbaum of the Center for Economic Justice said he was concerned the proposals might be reactive instead of proactive. "It's far more efficient to stop bad products from getting into the market in the first place," he said.