(A) PROCESSES AND SYSTEMS FOR IDENTIFYING, ASSESSING AND PRIORITIZING
MARKET CONDUCT PROBLEMS THAT HAVE A SUBSTANTIAL ADVERSE IMPACT ON
CONSUMERS, POLICYHOLDERS AND CLAIMANTS;
(B) MARKET CONDUCT ACTIONS BY THE SUPERINTENDENT TO SUBSTANTIATE SUCH
MARKET CONDUCT PROBLEMS AND A MEANS TO REMEDY SIGNIFICANT MARKET CONDUCT
PROBLEMS; AND
(C) PROCEDURES TO COMMUNICATE AND COORDINATE MARKET CONDUCT ACTIONS
AMONG STATES TO FOSTER THE MOST EFFICIENT AND EFFECTIVE USE OF
RESOURCES.
S 362. DEFINITIONS. (A) "COMPLAINT" MEANS A WRITTEN OR DOCUMENTED
ORAL COMMUNICATION MADE TO THE DEPARTMENT PRIMARILY EXPRESSING A GRIEV-
ANCE, MEANING AN EXPRESSION OF DISSATISFACTION. FOR HEALTH COMPANIES, A
GRIEVANCE IS A WRITTEN COMPLAINT SUBMITTED BY OR ON BEHALF OF A COVERED
PERSON.
(B) "MARKET CONDUCT ACTION" MEANS ANY OF THE FULL RANGE OF ACTIVITIES
THAT THE SUPERINTENDENT MAY INITIATE TO ASSESS THE MARKET AND PRACTICES
OF INDIVIDUAL INSURERS, BEGINNING WITH MARKET ANALYSIS AND EXTENDING TO
TARGETED EXAMINATIONS.
(C) "MARKET ANALYSIS" MEANS A PROCESS WHEREBY MARKET CONDUCT SURVEIL-
LANCE PERSONNEL COLLECT AND ANALYZE INFORMATION FROM FILED SCHEDULES,
SURVEYS, REQUIRED REPORTS AND OTHER SOURCES IN ORDER TO DEVELOP A BASE-
LINE AND TO IDENTIFY PATTERNS OR PRACTICES OF INSURERS THAT DEVIATE
SIGNIFICANTLY FROM THE NORM OR THAT MAY POSE A POTENTIAL RISK TO THE
INSURANCE CONSUMER.
(D) "MARKET CONDUCT SURVEILLANCE PERSONNEL" MEANS THOSE INDIVIDUALS
EMPLOYED OR CONTRACTED BY THE SUPERINTENDENT TO COLLECT, ANALYZE, REVIEW
OR ACT ON INFORMATION ON THE INSURANCE MARKETPLACE WHICH IDENTIFIES
PATTERNS OR PRACTICES OF INSURERS.
(E) "NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS" (NAIC) MEANS THE
ORGANIZATION OF INSURANCE REGULATORS FROM THE FIFTY STATES, THE DISTRICT
OF COLUMBIA AND FOUR UNITED STATES TERRITORIES.
(F) "NAIC MARKET ANALYSIS HANDBOOK" MEANS THE OUTLINE OF THE ELEMENTS
AND OBJECTIVES OF MARKET ANALYSIS DEVELOPED AND ADOPTED BY THE NAIC, AND
THE PROCESS BY WHICH STATES CAN ESTABLISH AND IMPLEMENT MARKET ANALYSIS
PROGRAMS.
(G) "NAIC MARKET CONDUCT EXAMINER'S HANDBOOK" MEANS THE SET OF GUIDE-
LINES DEVELOPED AND ADOPTED BY THE NAIC, WHICH DOCUMENTS ESTABLISHED
PRACTICES TO BE USED BY MARKET CONDUCT SURVEILLANCE PERSONNEL IN DEVEL-
OPING AND EXECUTING AN EXAMINATION.
(H) "NAIC MARKET CONDUCT UNIFORM EXAMINATION PROCEDURES" MEANS THE SET
OF GUIDELINES DEVELOPED AND ADOPTED BY THE NAIC DESIGNED TO BE USED BY
MARKET CONDUCT SURVEILLANCE PERSONNEL IN CONDUCTING AN EXAMINATION.
(I) "NAIC STANDARD DATA REQUEST" MEANS THE SET OF FIELD NAMES AND
DESCRIPTIONS DEVELOPED AND ADOPTED BY THE NAIC FOR USE BY MARKET CONDUCT
SURVEILLANCE PERSONNEL IN AN EXAMINATION.
(J) "QUALIFIED CONTRACT EXAMINER" MEANS A PERSON UNDER CONTRACT TO THE
SUPERINTENDENT, WHO IS QUALIFIED BY EDUCATION, EXPERIENCE AND, WHERE
APPLICABLE, PROFESSIONAL DESIGNATIONS, TO PERFORM MARKET CONDUCT
ACTIONS.
(K) "TARGETED EXAMINATION" MEANS A FOCUSED EXAM, BASED ON THE RESULTS
OF MARKET ANALYSIS INDICATING THE NEED TO REVIEW EITHER A SPECIFIC LINE
OF BUSINESS OR SPECIFIC BUSINESS PRACTICES, INCLUDING BUT NOT LIMITED
TO, UNDERWRITING AND RATING, MARKETING AND SALES, COMPLAINT HANDLING
OPERATIONS/MANAGEMENT, ADVERTISING MATERIALS, LICENSING, POLICYHOLDER
SERVICES, NON-FORFEITURES, CLAIMS HANDLING, OR POLICY FORMS AND FILINGS.
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A TARGETED EXAMINATION MAY BE CONDUCTED BY DESK EXAMINATION OR BY AN
ON-SITE EXAMINATION:
(1) "DESK EXAMINATION" MEANS A TARGETED EXAMINATION THAT IS CONDUCTED
BY AN EXAMINER AT A LOCATION OTHER THAN THE INSURER'S PREMISES. A DESK
EXAMINATION IS USUALLY PERFORMED AT THE DEPARTMENT'S OFFICES WITH THE
INSURER PROVIDING REQUESTED DOCUMENTS BY HARD COPY, MICROFICHE, DISCS OR
OTHER ELECTRONIC MEDIA, FOR REVIEW.
(2) "ON-SITE EXAMINATION" MEANS A TARGETED EXAMINATION CONDUCTED AT
THE INSURER'S HOME OFFICE OR THE LOCATION WHERE THE RECORDS UNDER REVIEW
ARE STORED.
(L) "SIGNIFICANT PREMIUM VOLUME" MEANS FIVE PERCENT OR MORE OF AN
INSURER'S TOTAL DIRECT BUSINESS PREMIUM FOR A GIVEN CATEGORY OF COVERAGE
AS IDENTIFIED ON THE INSURER'S ANNUAL FINANCIAL STATEMENT.
(M) "THIRD PARTY MODEL OR PRODUCT" MEANS A MODEL OR PRODUCT PROVIDED
BY AN ENTITY SEPARATE FROM AND NOT UNDER DIRECT OR INDIRECT CORPORATE
CONTROL OF THE INSURER USING THE MODEL OR PRODUCT.
S 363. MARKET ANALYSIS PROCEDURES. (A)(1) THE SUPERINTENDENT SHALL
GATHER INFORMATION FROM DATA CURRENTLY AVAILABLE TO THE DEPARTMENT, AS
WELL AS SURVEYS AND REQUIRED REPORTING REQUIREMENTS, INFORMATION
COLLECTED BY THE NAIC AND A VARIETY OF OTHER SOURCES IN BOTH THE PUBLIC
AND PRIVATE SECTORS, AND INFORMATION FROM WITHIN AND OUTSIDE THE INSUR-
ANCE INDUSTRY.
(2) SUCH INFORMATION SHALL BE ANALYZED IN ORDER TO DEVELOP A BASELINE
UNDERSTANDING OF THE MARKETPLACE AND TO IDENTIFY FOR FURTHER REVIEW
INSURERS AND/OR PRACTICES THAT DEVIATE SIGNIFICANTLY FROM THE NORM OR
THAT MAY POSE A POTENTIAL RISK TO THE INSURANCE CONSUMER. THE SUPER-
INTENDENT SHALL USE THE NAIC MARKET ANALYSIS HANDBOOK AS ONE RESOURCE IN
PERFORMING THIS ANALYSIS (OR PROCEDURES, ADOPTED BY REGULATION, THAT ARE
SUBSTANTIALLY SIMILAR TO THE NAIC MARKET ANALYSIS HANDBOOK).
(B) IF THE ANALYSIS COMPELS THE SUPERINTENDENT TO INQUIRE FURTHER INTO
A PARTICULAR INSURER OR PRACTICE, THE FOLLOWING CONTINUUM OF MARKET
CONDUCT ACTIONS MAY BE CONSIDERED PRIOR TO CONDUCTING A TARGETED,
ON-SITE MARKET CONDUCT EXAMINATION. THE ACTION SELECTED SHALL BE MADE
KNOWN TO THE INSURER IN WRITING. THESE ACTIONS MAY INCLUDE, BUT SHALL
NOT BE LIMITED TO:
(1) CORRESPONDENCE WITH THE INSURER;
(2) INSURER INTERVIEWS;
(3) INFORMATION GATHERING;
(4) POLICY AND PROCEDURE REVIEWS;
(5) INTERROGATORIES;
(6) REVIEW OF INSURER SELF-EVALUATION (IF NOT SUBJECT TO A PRIVILEGE
OF CONFIDENTIALITY) AND COMPLIANCE PROGRAMS, INCLUDING MEMBERSHIP IN A
BEST-PRACTICE ORGANIZATION;
(7) DESK EXAMINATION.
THE SUPERINTENDENT SHALL SELECT A MARKET CONDUCT ACTION THAT IS COST
EFFECTIVE FOR THE DEPARTMENT AND THE INSURER, WHILE STILL PROTECTING THE
INSURANCE CONSUMER.
(C) THE SUPERINTENDENT SHALL TAKE THOSE STEPS REASONABLY NECESSARY TO
ELIMINATE DUPLICATIVE INQUIRIES AND COORDINATE MARKET CONDUCT ACTIONS
AND FINDINGS WITH OTHER STATES.
S 364. PROTOCOLS FOR MARKET CONDUCT ACTIONS. (A) MARKET CONDUCT
ACTIONS TAKEN AS A RESULT OF A MARKET ANALYSIS SHALL FOCUS ON THE GENER-
AL BUSINESS PRACTICES AND COMPLIANCE ACTIVITIES OF INSURERS, RATHER THAN
IDENTIFYING INFREQUENT OR UNINTENTIONAL RANDOM ERRORS.
(B) (1) THE SUPERINTENDENT IS AUTHORIZED TO DETERMINE THE FREQUENCY
AND TIMING OF SUCH MARKET CONDUCT ACTIONS. THE TIMING SHALL DEPEND UPON
A. 3077 4
THE SPECIFIC MARKET CONDUCT ACTION TO BE INITIATED, UNLESS EXTRAORDINARY
CIRCUMSTANCES INDICATING A RISK TO CONSUMERS REQUIRE IMMEDIATE ACTION.
(2) IF THE SUPERINTENDENT HAS INFORMATION THAT MORE THAN ONE INSURER
IS ENGAGED IN COMMON PRACTICES THAT MAY VIOLATE STATUTE OR REGULATIONS,
HE/SHE MAY SCHEDULE AND COORDINATE MULTIPLE EXAMINATIONS SIMULTANEOUSLY.
(C) THE INSURER MAY BE GIVEN AN OPPORTUNITY TO RESOLVE MATTERS THAT
ARISE AS A RESULT OF A MARKET ANALYSIS TO THE SATISFACTION OF THE SUPER-
INTENDENT BEFORE ANY ADDITIONAL MARKET CONDUCT ACTIONS ARE TAKEN AGAINST
THE INSURER.
(D) FOR ANY CHANGE MADE TO AN NAIC WORK PRODUCT REFERENCED IN THIS
ARTICLE WHICH MATERIALLY CHANGES THE WAY IN WHICH MARKET CONDUCT ACTIONS
ARE CONDUCTED, THE SUPERINTENDENT SHALL GIVE NOTICE AND PROVIDE PARTIES
WITH AN OPPORTUNITY FOR A PUBLIC HEARING PURSUANT TO THE STATE ADMINIS-
TRATIVE PROCEDURE ACT. IF NO HEARING IS HELD, THE SUPERINTENDENT SHALL
USE THE VERSIONS OF SUCH WORK PRODUCTS MOST RECENTLY DEVELOPED AND
ADOPTED BY THE NAIC.
S 365. TARGETED ON-SITE MARKET CONDUCT EXAMINATIONS. (A) WHEN LESS
INTRUSIVE MARKET CONDUCT ACTIONS IDENTIFIED IN SUBSECTION (B) OF SECTION
THREE HUNDRED SIXTY-THREE OF THIS ARTICLE ARE NOT APPROPRIATE, THE
SUPERINTENDENT IS AUTHORIZED TO CONDUCT TARGETED, ON-SITE MARKET CONDUCT
EXAMINATIONS IN ACCORDANCE WITH THE NAIC MARKET CONDUCT UNIFORM EXAMINA-
TION PROCEDURES AND THE MARKET CONDUCT EXAMINERS HANDBOOK (OR PROCE-
DURES, ADOPTED BY REGULATION, THAT ARE SUBSTANTIALLY SIMILAR TO THE
FOREGOING NAIC PRODUCTS).
(B) CONCOMITANT WITH THE NOTIFICATION REQUIREMENTS ESTABLISHED IN
SUBSECTION (E) OF THIS SECTION, THE SUPERINTENDENT SHALL POST NOTIFICA-
TION ON THE NAIC EXAMINATION TRACKING SYSTEM, OR COMPARABLE NAIC PRODUCT
AS DETERMINED BY THE SUPERINTENDENT, THAT A MARKET CONDUCT EXAMINATION
HAS BEEN SCHEDULED.
(C) IN LIEU OF AN EXAMINATION OF A FOREIGN OR ALIEN INSURER LICENSED
IN THIS STATE UNDER THIS ARTICLE, THE SUPERINTENDENT MAY ACCEPT AN EXAM-
INATION REPORT ON THE INSURER AS PREPARED BY THE SUPERINTENDENT OF THE
INSURER'S STATE OF DOMICILE OR OF A STATE IN WHICH THE INSURER WROTE
SIGNIFICANT PREMIUM VOLUME, ACCORDING TO SUCH INSURER'S MOST RECENT
ANNUAL FINANCIAL STATEMENT, PROVIDED THAT THE STATE HAS ADOPTED THIS LAW
OR A MARKET CONDUCT SURVEILLANCE LAW THAT THE SUPERINTENDENT DEEMS
COMPARABLE.
(D) (1) PRIOR TO COMMENCEMENT OF A TARGETED ON-SITE MARKET CONDUCT
EXAMINATION, MARKET CONDUCT SURVEILLANCE PERSONNEL SHALL PREPARE A WORK
PLAN AND PROPOSED BUDGET. SUCH PROPOSED BUDGET, WHICH SHALL BE REASON-
ABLE FOR THE SCOPE OF THE EXAMINATION, AND WORK PLAN SHALL BE PROVIDED
TO THE COMPANY UNDER EXAMINATION.
(2) MARKET CONDUCT EXAMINATIONS SHALL, TO THE EXTENT FEASIBLE, UTILIZE
DESK EXAMINATIONS AND DATA REQUESTS PRIOR TO A TARGETED ON-SITE EXAMINA-
TION.
(3) MARKET CONDUCT EXAMINATIONS SHALL BE CONDUCTED IN ACCORDANCE WITH
THE PROVISIONS SET FORTH IN THE NAIC MARKET CONDUCT EXAMINERS HANDBOOK
AND THE NAIC MARKET CONDUCT UNIFORM EXAMINATIONS PROCEDURES (OR PROCE-
DURES, ADOPTED BY REGULATION, THAT ARE SUBSTANTIALLY SIMILAR TO THE
FOREGOING NAIC PRODUCTS).
(4) PRIOR TO THE CONCLUSION OF A TARGETED ON-SITE MARKET CONDUCT EXAM-
INATION, THE INDIVIDUAL AMONG THE MARKET CONDUCT SURVEILLANCE PERSONNEL
WHO IS DESIGNATED AS THE EXAMINER-IN-CHARGE SHALL SCHEDULE AN EXIT
CONFERENCE WITH THE INSURER.
(E) ANNOUNCEMENT OF THE EXAMINATION SHALL BE SENT TO THE INSURER AND
POSTED ON THE NAIC'S EXAMINATION TRACKING SYSTEM (OR COMPARABLE NAIC
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PRODUCT, AS DETERMINED BY THE SUPERINTENDENT) AS SOON AS POSSIBLE BUT IN
NO CASE LATER THAN SIXTY DAYS BEFORE THE ESTIMATED COMMENCEMENT OF THE
ON-SITE EXAMINATION. SUCH ANNOUNCEMENT SHALL CONTAIN:
(1) THE NAME AND ADDRESS OF THE INSURER OR INSURERS BEING EXAMINED;
(2) THE NAME AND CONTACT INFORMATION OF THE EXAMINER-IN-CHARGE;
(3) THE REASON OR REASONS FOR THE TARGETED, ON-SITE EXAMINATION;
(4) THE DATE THE ON-SITE EXAMINATION IS SCHEDULED TO BEGIN;
(5) NOTICE OF ANY NON-INSURANCE DEPARTMENT PERSONNEL WHO WILL ASSIST
IN THE EXAMINATION;
(6) A BUDGET AND WORK PLAN FOR THE TARGETED, ON-SITE EXAMINATION; AND
(7) A REQUEST FOR THE INSURER TO NAME ITS EXAMINATION COORDINATOR.
(F) THE SUPERINTENDENT SHALL CONDUCT A PRE-EXAMINATION CONFERENCE WITH
THE INSURER EXAMINATION COORDINATOR AND KEY PERSONNEL TO CLARIFY EXPEC-
TATIONS THIRTY DAYS PRIOR TO COMMENCEMENT OF THE EXAMINATION.
(G) THE DEPARTMENT SHALL USE THE NAIC STANDARD DATA REQUEST (OR COMPA-
RABLE PRODUCT, ADOPTED BY REGULATION, THAT IS SUBSTANTIALLY SIMILAR TO
THE FOREGOING NAIC PRODUCT).
(H) (1) THE SUPERINTENDENT SHALL ADHERE TO THE FOLLOWING TIMELINE,
UNLESS A MUTUAL AGREEMENT IS REACHED WITH THE INSURER TO MODIFY THE
TIMELINE:
(A) THE SUPERINTENDENT SHALL DELIVER THE DRAFT REPORT TO THE INSURER
WITHIN SIXTY DAYS OF THE COMPLETION OF THE EXAMINATION. COMPLETION OF
THE EXAMINATION SHALL BE DEFINED AS THE DATE THE SUPERINTENDENT CONFIRMS
IN WRITING THAT THE EXAMINATION IS COMPLETED.
(B) THE INSURER MUST RESPOND WITH WRITTEN COMMENTS WITHIN THIRTY DAYS
OF RECEIPT OF THE DRAFT REPORT.
(C) THE DEPARTMENT MUST INFORMALLY RESOLVE ISSUES AND PREPARE A FINAL
REPORT WITHIN THIRTY DAYS OF RECEIPT OF THE INSURER'S WRITTEN COMMENTS,
UNLESS A MUTUAL AGREEMENT IS REACHED TO EXTEND THE DEADLINE. THE SUPER-
INTENDENT MAY MAKE CORRECTIONS AND OTHER CHANGES, AS APPROPRIATE.
(D) THE INSURER SHALL, WITHIN THIRTY DAYS, ACCEPT THE FINAL REPORT,
ACCEPT THE FINDINGS OF THE REPORT OR REQUEST A HEARING. AN ADDITIONAL
THIRTY DAYS SHALL BE ALLOWED IF AGREED TO BY THE SUPERINTENDENT AND THE
INSURER. ANY SUCH HEARING REQUEST MUST BE MADE IN WRITING AND MUST BE
CONDUCTED PURSUANT TO THE STATE ADMINISTRATIVE PROCEDURE ACT.
(2) THE FINAL WRITTEN AND ELECTRONIC MARKET CONDUCT REPORT SHALL
INCLUDE THE INSURER'S WRITTEN COMMENTS AND ANY AGREED-TO CORRECTIONS OR
CHANGES.
(I) (1) UPON ADOPTION OF THE EXAMINATION REPORT PURSUANT TO SUBSECTION
(H) OF THIS SECTION, THE SUPERINTENDENT SHALL CONTINUE TO HOLD THE
CONTENT OF THE EXAMINATION REPORT AS PRIVATE AND CONFIDENTIAL FOR A
PERIOD OF THIRTY DAYS, EXCEPT TO THE EXTENT PROVIDED FOR IN PARAGRAPH
TWO OF THIS SUBSECTION. THEREAFTER, THE SUPERINTENDENT SHALL OPEN THE
REPORT FOR PUBLIC INSPECTION, PROVIDED NO COURT OF COMPETENT JURISDIC-
TION HAS STAYED ITS PUBLICATION.
(2) NOTHING CONTAINED IN THIS ARTICLE SHALL PREVENT OR BE CONSTRUED AS
PREVENTING THE SUPERINTENDENT FROM DISCLOSING THE CONTENT OF AN EXAMINA-
TION REPORT, PRELIMINARY EXAMINATION REPORT OR RESULTS, OR ANY MATTER
RELATING THERETO, TO THE DEPARTMENT OF THIS OR ANY OTHER STATE OR AGENCY
OF THE FEDERAL GOVERNMENT AT ANY TIME, PROVIDED THE AGENCY OR OFFICE
RECEIVING THE REPORT OR MATTERS RELATING THERETO AGREES TO HOLD IT
CONFIDENTIAL AND IN A MANNER CONSISTENT WITH THIS ARTICLE.
(J) (1) WHERE THE REASONABLE AND NECESSARY COST OF A MARKET CONDUCT
EXAMINATION IS TO BE ASSESSED AGAINST THE INSURER UNDER EXAMINATION,
SUCH FEES SHALL BE CONSISTENT WITH THAT OTHERWISE AUTHORIZED BY LAW.
A. 3077 6
SUCH FEES SHALL BE ITEMIZED AND BILLS SHALL BE PROVIDED TO THE INSURER
ON A MONTHLY BASIS FOR REVIEW PRIOR TO SUBMISSION FOR PAYMENT.
(2) THE SUPERINTENDENT SHALL MAINTAIN ACTIVE MANAGEMENT AND OVERSIGHT
OF EXAMINATION COSTS, INCLUDING COSTS ASSOCIATED WITH HIS OR HER OWN
EXAMINERS AND WITH RETAINING QUALIFIED CONTRACT EXAMINERS NECESSARY TO
PERFORM AN ON-SITE EXAMINATION. TO THE EXTENT THE SUPERINTENDENT RETAINS
OUTSIDE ASSISTANCE, THE SUPERINTENDENT MUST HAVE IN WRITING PROTOCOLS
THAT:
(A) CLEARLY IDENTIFY THE TYPES OF FUNCTIONS TO BE SUBJECT TO OUTSOURC-
ING;
(B) PROVIDE SPECIFIC TIMELINES FOR COMPLETION OF THE OUTSOURCED
REVIEW;
(C) REQUIRE DISCLOSURE OF CONTRACT EXAMINERS' RECOMMENDATIONS;
(D) ESTABLISH AND UTILIZE A DISPUTE RESOLUTION OR ARBITRATION MECH-
ANISM TO RESOLVE CONFLICTS WITH INSURERS REGARDING EXAMINATION FEES; AND
(E) REQUIRE DISCLOSURE OF THE TERMS OF THE CONTRACTS WITH THE OUTSIDE
CONSULTANTS THAT WILL BE USED, SPECIFICALLY THE FEES AND/OR HOURLY RATES
THAT CAN BE CHARGED.
(3) THE SUPERINTENDENT SHALL REVIEW AND AFFIRMATIVELY ENDORSE DETAILED
BILLINGS FROM THE QUALIFIED CONTRACT EXAMINER BEFORE THE DETAILED BILL-
INGS ARE SENT TO THE INSURER.
S 366. CONFIDENTIALITY REQUIREMENTS. (A) EXCEPT AS OTHERWISE PROVIDED
BY LAW, MARKET CONDUCT SURVEILLANCE PERSONNEL SHALL HAVE FREE AND FULL
ACCESS TO ALL BOOKS AND RECORDS, EMPLOYEES, OFFICERS AND DIRECTORS, AS
PRACTICABLE, OF THE INSURER DURING REGULAR BUSINESS HOURS. AN INSURER
UTILIZING A THIRD-PARTY MODEL OR PRODUCT FOR ANY OF THE ACTIVITIES UNDER
EXAMINATION SHALL CAUSE, UPON THE REQUEST OF MARKET CONDUCT SURVEILLANCE
PERSONNEL, THE DETAILS OF SUCH MODELS OR PRODUCTS TO BE MADE AVAILABLE
TO SUCH PERSONNEL. ALL DOCUMENTS, INCLUDING BUT NOT LIMITED TO WORKING
PAPERS, THIRD PARTY MODELS OR PRODUCTS, COMPLAINT LOGS, AND COPIES THER-
EOF, CREATED, PRODUCED OR OBTAINED BY OR DISCLOSED TO THE SUPERINTENDENT
OR ANY OTHER PERSON IN THE COURSE OF ANY MARKET CONDUCT ACTIONS MADE
PURSUANT TO THIS ARTICLE, OR IN THE COURSE OF MARKET ANALYSIS BY THE
SUPERINTENDENT OF THE MARKET CONDITIONS OF AN INSURER, OR OBTAINED BY
THE NAIC AS A RESULT OF ANY OF THE PROVISIONS OF THIS ARTICLE, SHALL BE
CONFIDENTIAL BY LAW AND PRIVILEGED, SHALL NOT BE SUBJECT TO SUBPOENA AND
SHALL NOT BE SUBJECT TO DISCOVERY OR ADMISSIBLE IN EVIDENCE IN ANY
PRIVATE CIVIL ACTION.
(B) NO WAIVER OF ANY APPLICABLE PRIVILEGE OR CLAIM OF CONFIDENTIALITY
IN THE DOCUMENTS, MATERIALS, OR INFORMATION SHALL OCCUR AS A RESULT OF
DISCLOSURE TO THE SUPERINTENDENT UNDER THIS SECTION.
(C) MARKET CONDUCT SURVEILLANCE PERSONNEL SHALL BE VESTED WITH THE
POWER TO ISSUE SUBPOENAS AND EXAMINE INSURANCE COMPANY PERSONNEL UNDER
OATH WHEN SUCH ACTION IS ORDERED BY THE SUPERINTENDENT PURSUANT TO THIS
ARTICLE.
(D) NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (A) OF THIS SECTION,
IN ORDER TO ASSIST IN THE PERFORMANCE OF THE SUPERINTENDENT'S DUTIES,
THE SUPERINTENDENT MAY:
(1) SHARE DOCUMENTS, MATERIALS OR OTHER INFORMATION, INCLUDING THE
CONFIDENTIAL AND PRIVILEGED DOCUMENTS, MATERIALS OR INFORMATION SUBJECT
TO SUBSECTION (A) OF THIS SECTION, WITH OTHER STATE, FEDERAL AND INTER-
NATIONAL REGULATORY AGENCIES AND LAW ENFORCEMENT AUTHORITIES AND THE
NAIC AND ITS AFFILIATES AND SUBSIDIARIES, PROVIDED THAT THE RECIPIENT
AGREES TO AND HAS THE LEGAL AUTHORITY TO MAINTAIN THE CONFIDENTIALITY
AND PRIVILEGED STATUS OF THE DOCUMENT, MATERIAL, COMMUNICATION OR OTHER
INFORMATION;
A. 3077 7
(2) RECEIVE DOCUMENTS, MATERIALS, COMMUNICATIONS OR INFORMATION,
INCLUDING OTHERWISE CONFIDENTIAL AND PRIVILEGED DOCUMENTS, MATERIALS OR
INFORMATION, FROM THE NAIC AND ITS AFFILIATES OR SUBSIDIARIES, AND FROM
REGULATORY AND LAW ENFORCEMENT OFFICIALS OF OTHER FOREIGN OR DOMESTIC
JURISDICTIONS, AND SHALL MAINTAIN AS CONFIDENTIAL OR PRIVILEGED ANY
DOCUMENT, MATERIAL OR INFORMATION RECEIVED WITH NOTICE OR THE UNDER-
STANDING THAT IT IS CONFIDENTIAL OR PRIVILEGED UNDER THE LAWS OF THE
JURISDICTION THAT IS THE SOURCE OF THE DOCUMENT, MATERIAL OR INFORMA-
TION; AND
(3) ENTER INTO AGREEMENTS GOVERNING THE SHARING AND USE OF INFORMATION
CONSISTENT WITH THIS SECTION.
S 367. MARKET CONDUCT SURVEILLANCE PERSONNEL. (A) MARKET CONDUCT
SURVEILLANCE PERSONNEL SHALL BE QUALIFIED BY EDUCATION, EXPERIENCE AND,
WHERE APPLICABLE, PROFESSIONAL DESIGNATIONS. THE SUPERINTENDENT MAY
SUPPLEMENT THE IN-HOUSE MARKET CONDUCT SURVEILLANCE STAFF WITH QUALIFIED
OUTSIDE PROFESSIONAL ASSISTANCE IF HE OR SHE DETERMINES THAT SUCH
ASSISTANCE IS NECESSARY.
(B) MARKET CONDUCT SURVEILLANCE PERSONNEL HAVE A CONFLICT OF INTEREST,
EITHER DIRECTLY OR INDIRECTLY, IF THEY ARE AFFILIATED WITH THE MANAGE-
MENT, HAVE BEEN EMPLOYED BY, OR OWN A PECUNIARY INTEREST IN THE INSURER
SUBJECT TO ANY EXAMINATION UNDER THIS ARTICLE. THIS SECTION SHALL NOT
BE CONSTRUED TO AUTOMATICALLY PRECLUDE AN INDIVIDUAL FROM BEING:
(1) A POLICYHOLDER OR CLAIMANT UNDER AN INSURANCE POLICY;
(2) A GRANTEE OF A MORTGAGE OR SIMILAR INSTRUMENT ON THE INDIVIDUAL'S
RESIDENCE FROM A REGULATED ENTITY IF DONE UNDER CUSTOMARY TERMS AND IN
THE ORDINARY COURSE OF BUSINESS;
(3) AN INVESTMENT OWNER IN SHARES OF REGULATED DIVERSIFIED INVESTMENT
COMPANIES; OR
(4) A SETTLOR OR BENEFICIARY OF A "BLIND TRUST" INTO WHICH ANY OTHER-
WISE PERMISSIBLE HOLDINGS HAVE BEEN PLACED.
S 368. IMMUNITY FOR MARKET CONDUCT SURVEILLANCE PERSONNEL. (A) NO
CAUSE OF ACTION SHALL ARISE NOR SHALL ANY LIABILITY BE IMPOSED AGAINST
THE SUPERINTENDENT, THE SUPERINTENDENT'S AUTHORIZED REPRESENTATIVES OR
AN EXAMINER APPOINTED BY THE SUPERINTENDENT FOR ANY STATEMENTS MADE OR
CONDUCT PERFORMED IN GOOD FAITH WHILE CARRYING OUT THE PROVISIONS OF
THIS ARTICLE.
(B) NO CAUSE OF ACTION SHALL ARISE, NOR SHALL ANY LIABILITY BE IMPOSED
AGAINST ANY PERSON FOR THE ACT OF COMMUNICATING OR DELIVERING INFORMA-
TION OR DATA TO THE SUPERINTENDENT OR THE SUPERINTENDENT'S AUTHORIZED
REPRESENTATIVE OR EXAMINER PURSUANT TO AN EXAMINATION MADE UNDER THIS
ARTICLE, IF THE ACT OF COMMUNICATION OR DELIVERY WAS PERFORMED IN GOOD
FAITH AND WITHOUT FRAUDULENT INTENT OR THE INTENT TO DECEIVE.
(C) A PERSON IDENTIFIED IN SUBSECTION (A) OF THIS SECTION SHALL BE
ENTITLED TO AN AWARD OF ATTORNEY'S FEES AND COSTS IF HE OR SHE IS THE
PREVAILING PARTY IN A CIVIL CAUSE OF ACTION FOR LIBEL, SLANDER OR ANY
OTHER RELEVANT TORT ARISING OUT OF ACTIVITIES IN CARRYING OUT THE
PROVISIONS OF THIS ARTICLE AND THE PARTY BRINGING THE ACTION WAS NOT
SUBSTANTIALLY JUSTIFIED IN DOING SO. FOR PURPOSES OF THIS SECTION A
PROCEEDING IS "SUBSTANTIALLY JUSTIFIED" IF IT HAD A REASONABLE BASIS IN
LAW OR FACT AT THE TIME THAT IT WAS INITIATED.
(D) THIS SECTION DOES NOT ABROGATE OR MODIFY IN ANY WAY ANY COMMON LAW
OR STATUTORY PRIVILEGE OR IMMUNITY HERETOFORE ENJOYED BY ANY PERSON
IDENTIFIED IN SUBSECTION (A) OF THIS SECTION.
S 369. FINES AND PENALTIES. (A) FINES AND PENALTIES LEVIED PURSUANT
TO THIS ARTICLE OR OTHER PROVISIONS OF THIS CHAPTER SHALL BE CONSISTENT,
REASONABLE AND JUSTIFIED.
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(B) THE SUPERINTENDENT SHALL TAKE INTO CONSIDERATION ACTIONS TAKEN BY
INSURERS THAT MAINTAIN MEMBERSHIP IN BEST-PRACTICE ORGANIZATIONS THAT
EXIST TO PROMOTE HIGH ETHICAL STANDARDS OF CONDUCT IN THE MARKETPLACE,
AND INSURERS THAT SELF ASSESS, SELF-REPORT AND REMEDIATE PROBLEMS
DETECTED TO MITIGATE FINES LEVIED PURSUANT TO THIS ARTICLE.
S 370. PARTICIPATION IN NATIONAL MARKET CONDUCT DATABASES. (A) THE
SUPERINTENDENT SHALL COLLECT AND REPORT MARKET DATA TO THE NAIC'S MARKET
INFORMATION SYSTEMS, INCLUDING THE COMPLAINT DATABASE SYSTEM, THE EXAM-
INATION TRACKING SYSTEM, AND THE REGULATORY INFORMATION RETRIEVAL
SYSTEM, OR OTHER COMPARABLE SUCCESSOR NAIC PRODUCTS AS DETERMINED BY THE
SUPERINTENDENT. COMPLAINTS REPORTED TO THE COMPLAINT DATABASE SYSTEM
SHALL BE JUSTIFIED COMPLAINTS THAT HAVE BEEN SUBSTANTIATED BY THE
DEPARTMENT CONSUMER SERVICE OR OTHER APPROPRIATE PERSONNEL.
(B) INFORMATION COLLECTED AND MAINTAINED BY THE DEPARTMENT SHALL BE
COMPILED IN A MANNER THAT MEETS THE REQUIREMENTS OF THE NAIC.
S 371. COORDINATION WITH OTHER STATES THROUGH THE NAIC. THE SUPER-
INTENDENT SHALL SHARE INFORMATION AND COORDINATE THE DEPARTMENT'S MARKET
ANALYSIS AND EXAMINATION EFFORTS WITH OTHER STATES THROUGH THE NAIC.
S 372. ADDITIONAL DUTIES OF THE SUPERINTENDENT. (A) AT LEAST ONCE PER
YEAR, OR MORE FREQUENTLY IF DEEMED NECESSARY, THE SUPERINTENDENT SHALL
PROVIDE IN AN APPROPRIATE MANNER TO INSURERS AND OTHER ENTITIES SUBJECT
TO THE SCOPE OF THIS ARTICLE INFORMATION ON NEW LAWS AND REGULATIONS,
ENFORCEMENT ACTIONS AND OTHER INFORMATION THE SUPERINTENDENT DEEMS
PERTINENT TO ENSURE COMPLIANCE WITH MARKET CONDUCT REQUIREMENTS.
(B) THE SUPERINTENDENT SHALL DESIGNATE A SPECIFIC PERSON OR PERSONS
WITHIN THE DEPARTMENT WHOSE RESPONSIBILITIES SHALL INCLUDE THE RECEIPT
OF INFORMATION FROM EMPLOYEES OF INSURERS AND LICENSED ENTITIES CONCERN-
ING VIOLATIONS OF LAWS, RULES OR REGULATIONS BY EMPLOYERS. SUCH PERSON
OR PERSONS SHALL BE PROVIDED WITH PROPER TRAINING ON THE HANDLING OF
SUCH INFORMATION, WHICH SHALL BE DEEMED A CONFIDENTIAL COMMUNICATION FOR
THE PURPOSES OF THIS SECTION.
S 2. Sections 309, 310, 311, 312 and 313 of the insurance law are
REPEALED.
S 3. This act shall take effect on the one hundred eightieth day after
it shall have become a law.