Insurers offered comments on Jan. 16 following an industry gathering to discuss ideas for the legislation. Domestic deference, due process and confidentiality were among the areas that insurers offered comment on in the letter.

The joint trade letter recommended removing a domestic deference section until the issue could be better examined. At issue is how much control should be given to the regulator whose state is the venue where an insurer is domiciled.

A due process format for insurers who believe that a commissioner's action is extending beyond the bounds of regulatory authority is a point that insurers say they conceptually support. However, the use of arbitration to ensure due process is a remedy that several trade associations said they are still vetting before members.

And, insurers offered language they said would ensure confidentiality of a company's information so that it would be considered "confidential by law and privileged" and "shall not be subject to subpoena and shall not be subject to discovery or admissible in evidence in any private civil action."

Language in the recommendations offered by insurers encompasses a simple concept of domestic deference that allows a state, if it chooses, to accept the market conduct findings of a state of domicile, said Linda Lanam, vice president-annuities with the American Council of Life Insurers, Washington.

But more work is needed to determine how to coordinate examinations in which a nondomiciliary state, rather than simply accepting the work of a state of domicile, wishes to participate in the exam or to examine compliance with laws or regulations which may differ significantly from domiciliary states, she added.

As states adopt the model, the wording providing for optional domestic deference will allow life insurance companies to encourage states to take advantage of the option for life insurers, whose business is more national than state-specific in scope, she explained.

Ms.Lanam said that the inclusion of definitions created and offered by insurers is important for ensuring uniformity if the model is enacted in a state.

Creation of definitions is important, agreed Scott Cipinko, executive director of the Life Insurers Council, Atlanta. The reason, according to Mr. Cipinko, is that there can be different understandings for a term, and if a term is defined in a drafting note, that note might be omitted in some state legislatures.

The goal is to create a new market conduct structure where there is broad consensus, said Don Cleasby, assistant vice president and assistant general council with the Property Casualty Insurers Association of America, Des Plaines, Ill. The PCI organization was formed by the recent merger of the Alliance of American Insurers and National Association of Independent Insurers.

On the issue of domestic deference, Mr. Cleasby said that it is less clear if it would work for property-casualty companies because of the differences in lines of business and geography.

Another area of concern he cited is the referencing of models of the National Association of Insurance Commissioners, Kansas City, Mo., in the NCOIL model. NAIC work products such as the Market Analysis Handbook are living documents and automatically enacting changes could be delegating responsibilities of state insurance departments to the NAIC, Mr. Cleasby added.

The inclusion of an arbitration provision is something that the National Association of Mutual Insurance Companies, Indianapolis, supports, according to Dave Reddick, market regulation manager. Its use is not designed to be preemptive but to protect companies from a "fishing expedition" during a market conduct review, he explained.

Uniformity and consistency are goals that are important to achieve in any market conduct model effort, said Laura Kersey, assistant vice president-Northeast region, with the American Insurance Association, Washington.

If a model is to be comprehensive, it should include a due process provision, said Ralph Scott, director of state services with Blue Cross Blue Shield Association, Washington.

If the model is adopted in a number of states and there are more uniform standards, then there might be more comfort with the issue of domestic deference, he added.