Market Conduct

2016/4/3 – LIIIWG CC, NAIC Proceedings

<Mr. Lovendusky – ACLI> said the ACLI work group thinks that most confusion for consumers involves complex products like universal life, and not Simple products like term life. He said consumers are mostly confused about options, guarantees and riders.

The ACLI work group was considering asking the life insurance and Annuities (A) Committee to narrow the charge to look at only products with options, guarantees and riders, but Ms. Cude said she thinks that it is important to consider how the disclosures for all products could be improved.

“More complex products sold to individual consumers (e.g., universal life policies) tend to generate more market conduct problems than simple products (e.g., term life insurance).” 
2003, “The Path to Reform –The Evolution of Market Conduct Surveillance Regulation,” Prepared for the Insurance Legislators Foundation by PricewaterhouseCoopers LLP and Georgia State University Public interest in various aspects of insurance regulation has risen and fallen over its history, but one area that has remained obscured is market conduct regulation.
2001 – An Assessment of Insurance Market Conduct Surveillance, Journal of Insurance Regulation Vol. 20, No.1 “Problems spotted during a market conduct review can be a precursor to financial solvency concerns.”  NAIC Webpage, https://content.naic.org/cipr_topics/topic_market_conduct_regulation.htm

1999-4 NAIC “Mr. DeAngelo <Commissioner> said he did not recall seeing incorrect or misleading training materials, so this is somewhat a theoretical question.

Mr. Hanson <Commissioner> responded that he had seen misleading materials in market conduct examinations. “

Market Regulation and Consumer Affairs (D) Committee
Market Actions (D) Working Group 
Market Analysis Procedures (D) Working Group
Market Conduct Annual Statement Blanks (D) Working Group
Market Conduct Examination Standards (D) Working Group
Market Regulation Certification (D) Working Group
Privacy Protections (D) Working Group

Market Conduct Annual Statement (MCAS) collection system

Market Conduct Regulation Guidelines Working Group of the Market Conduct and Consumer Affairs (EX3) Subcommittee, NAIC Proceedings 1995 4th Quarter
ATTACHMENT FOUR

Documents

1974, Strengthening the Surveillance System : final report, McKinsey & Company, Inc, 126p, NAIC Library

1981, Background paper on the status of the regulation of market conduct in the insurance industry, 17p, Brummond, David J., Sowka, M. Patricia, NAIC Library

 

1998, Market Conduct: A New Actuarial Frontier, Society of Actuaries
https://www.soa.org/globalassets/assets/library/proceedings/record-of-the-society-of-actuaries/1990-99/1998/january/rsa98v24n312of.pdf

The Market Conduct Analysis Framework

UNFAIR TRADE PRACTICES ACT – MDL-880

MARKET CONDUCT SURVEILLANCE MODEL LAW  – MDL-693

MARKET CONDUCT RECORD RETENTION AND PRODUCTION MODEL REGULATION  – MDL-910

2005-2 NAIC Proc.

  • Responding To Market Conduct Problems (Section VI)
  1. Self-Audits

States may monitor company self-audits. “Best practices” organizations or independent standard-setting organizations, such as IMSA in the life insurance industry, promote self-audits or self-evaluative activities and mandate corrective actions on the part of their members.

New Jersey MetLife adoptrptmetlife.pdf

 

https://www.state.nj.us/dobi/division_consumers/insurance/mcexams/adoptrptmetlife.pdf

   In its June 7, 1994 Consent Order #94-102, the NJDBI cited N.J.S.A. 17B:30-3 andN.J.A.C. 11:2-23.4 and subsequently fined MetLife $965,555 for MetLife’s practice of misrepresenting life insurance to be retirement or savings plans, particularly in advertisements sent to nurses and other professionals.