Ms. Marema was critical of model statute language up for consideration at the National Association of Insurance Commissioners meeting next week in San Francisco.

At issue is the Market Conduct Surveillance Model Act, originally developed by the National Conference of Insurance Legislators and since modified during drafting by the NAIC. Ms. Marema said insurers believe the regulators' language "retreats" from the NCOIL model, which "wasn't perfect."

Mr. Birnbaum, in an e-mail, said that his group supports the NAIC version amending the NCOIL model, "and disagrees with the industry characterizations of the changes.

Ms. Marema said PCI is concerned with a provision that she said would have the effect of creating a statute that, once a state adopted it, would allow the NAIC to make subsequent alterations to the statute without the need for approval from the state legislature.

Ms. Marema explained that this could come about because the NAIC surveillance law language requires states to follow procedures in the NAIC model examination handbook. The rules in the handbook, she said, are subject to later alteration.

Under the NCOIL model, according to Ms. Marema, when there is a material change to the handbook, interested parties can ask regulators to hold an administrative hearing on the revision.

PCI is concerned, she said, because the NAIC would limit the definition of a material change to one where there is a direct conflict with existing state law. Ms. Marema said PCI believes that a change--to a new form of data call, for example--while it might not conflict with any existing statute, would certainly be a material change.

Mr. Birnbaum cited points his group made in a letter to commissioners yesterday. The letter said that "there is no agreement on what a material change in the NAIC work product [is]."

"Consequently, there will be arguments about what type of change triggers the hearing under the administrative procedures act. And this has the real potential for creating roadblocks for regulators?delays in carrying out a market conduct action because of a minor change in an NAIC work product that an insurer claims is material."

Mr. Birnbaum wrote that his group believes the revised model would make regulators more accountable than under the original NCOIL draft, and the language "gives insurers a much clearer right to challenge a regulator's action when appropriate."

The consumer group letter also complained that a recently adopted NAIC committee report on medical liability insurance that argues for caps on non-economic damages is not backed up by analysis and was improperly adopted. According to Mr. Birnbaum, the vote on the report had three states voting in opposition, three in favor and four registering a "no" vote. The non-voters were counted as "yes" votes. That was "completely inappropriate," according to Mr. Birnbaum.