Seward proposes market conduct, uniformity framework legislation.
ALBANY, N.Y., May 2 -- A statutory framework for New York and other states to foster uniformity, achieve greater efficiency, and improve communication with respect to market conduct surveillance activities would be provided by legislation sponsored by Senator James L. Seward (R/C/I-Chenango), Chairman of the Senate Committee on Insurance.
"Insurance is a financial service built on trust," said Seward. "In return for a premium received today, a consumer trusts that the insurer will be there tomorrow, next year, or decades later to pay a claim. State insurance regulators must ensure that insurers invest and account for the premium they receive in a manner that will enable the future payment of these claims. They must further ensure that the conduct of insurers is subject to a regulatory paradigm that creates an environment resulting in ethical behavior and a proper corporate culture and philosophy, reinforced by standards, systems, and controls that seek to achieve compliance with applicable insurance laws and the fair treatment of policyholders in accordance with the insurance contract. Very limited legislative guidance and regulatory coordination exists with respect to market conduct surveillance.
"Participants in market conduct regulation must recognize that they are part of a national system of regulation that needs to become more standardized and uniform," Seward explained. "This legislation is reflective of the philosophy that market conduct surveillance activities of the states can be improved to better identify systemic problems that call for appropriate regulatory action, rather than the identification of isolated transgressions. The bill's underlying premise is that the coordinated use by states of their limited resources can, if done properly, lead to substantial improvements in insurance regulation and a smarter market conduct surveillance system. In doing so, states will demonstrate that the protection of consumers through clear and properly enforced market conduct standards is indeed best accomplished under the existing paradigm of state-based insurance regulation.
"This bill creates the legislative framework for New York and other states to implement uniform policies and procedures governing market conduct surveillance by their insurance departments," said Seward. "It contains essential ingredients to reach this goal.
"Existing law sets forth minimum provisions governing the superintendent's responsibilities with respect to market conduct examinations of licensed insurers in New York State. This legislation would substitute much more specific and comprehensive provisions and, if adopted by other states, harmonize the market conduct surveillance process from state to state," Seward concluded.
There would be no fiscal implications from the bill, "although cost savings and new efficiencies in market conduct activities may be realized while simultaneously enhancing consumer protection," said Seward.