Market Regulation

Market analysis to assess the quality of every insurers conduct in the marketplace, uniformity, and interstate collaboration the goal of the market regulatory enhancements is to create a common set of standards for a uniform market regulatory oversight program that will include all states.

The NAIC has established market analysis, market conduct, and interstate collaboration, as the three pillars on which the states enhanced market regulatory system will rest. The NAIC recognizes that the marketplace is generally the best regulator of insurance-related activity. However, there are instances where the market place does not properly respond to actions that are contrary to the best interests of its participants. A strong and reasonable market regulation program will discover these situations, thereby allowing regulators to respond and act appropriately to change company behavior.

Market Analysis

While all states conduct market analysis in some form, it is imperative that each state have a formal and rigorous market analysis program that provides consistent and routine reports on general market problems and companies that may be operating outside general industry norms.  To meet this goal:

(1)  Each state will produce a standardized market regulatory profile for each nationally significant domestic company. The creation of this profile will depend upon the collection of data by each state and each states full participation in the NAICs market information systems and new NAIC market analysis standards; and

(2) Each state will adopt uniform market analysis standards and procedures and integrate market analysis with other key market regulatory functions.

Market Conduct

States will also implement uniform market conduct examination procedures that leverage the use of automated examination techniques and uniform data calls; and

(1) States will implement uniform training and certification standards for all market regulatory
   personnel, especially market analysts and market conduct examiners; and

(2) The NAICs Market Analysis Working Group will provide the expertise and guidance to ensure the viability of uniform market regulatory oversight while preserving local control over matters that directly affect consumers within each state

Interstate Collaboration

The implementation of uniform standards and enhanced training and qualifications for market regulatory staff will create a regulatory system in which states have the confidence to rely on each others regulatory efforts. This reliance will create a market regulatory system of greater domestic deference, thus allowing individual states to concentrate their market regulatory efforts on issues that are unique to their individual market place conditions.

(1) Each state will monitor its nationally significant domestic companies on an on-going basis, including market analysis and appropriate follow up to address any identified problems,  

   (2) Market conduct examinations of nationally significant companies performed by a non-domestic state will be eliminated unless there is a specific reason that requires a targeted market conduct examination; and

(3) The Market Analysis Working Group will assist states to identify market activities that have a national impact and provide guidance to ensure that appropriate regulatory action is being taken against insurance companies and producers and that general market issues are being adequately addressed. This peer review process will become a fundamental and essential part of the NAICs market regulatory system.