In a recent Emerging Issues Commentary*, Lawrence Mirel of Wiley Rein, a former Insurance Commissioner for the District of Columbia and former Member of the NAIC, discussed the limits of the authority of the National Association of Insurance Commissioners (NAIC), and described the proposal by the NAIC Market Conduct and Consumer Affairs (D) Committee to require that all market conduct information on insurance companies currently gathered by the individual states be submitted to the NAIC yearly as a supplement to the Annual Statement Blank. The Annual Statement Blank is considered a public document, but as Mr. Mirel pointed out, the laws of most states require that market conduct information be treated as confidential. Thus compliance with the D Committee proposal would require most state insurance regulators to violate local confidentiality statutes. The insurance industry has been seeking to delay the vote and to enter into a dialogue with the NAIC over how data can be gathered centrally by the NAIC while maintaining the confidentiality of that data under state statutes.

The scheduling of a vote on the proposal is an escalation of the dispute to a higher level. If the NAIC goes ahead with the vote and the proposal passes, there is a real prospect of litigation, as companies will go to court to enforce the state confidentiality laws.

The National Council of Insurance Legislators (NCOIL) has also entered the fray, sending a letter to Kansas Commissioner Sandy Praeger, the current president of the NAIC, pointing out that an attempt to get around state-enacted confidentiality laws by changing the method of reporting market conduct data will violate the intent of state legislators who enacted those laws.

*Editor’s Note: The Insurance Law Center is now featuring an excerpted summary of Wiley Rein LLP on the Showdown Looming Over NAIC's Authority in the Insights & Analysis section of this website, which readers may access by clicking here.

Lexis.com subscribers may purchase the full text of Mr. Mirel’s expert commentary by clicking here.