Earlier that year, Rep. Mike Oxley, R-Ohio, who chairs the House Financial Services Committee, proposed legislation calling for federal preemption of state laws to nationalize insurance regulation, and state regulators and lawmakers seemed eager to get with that program known as the State Modernization and Regulatory Transparency (or SMART) Act.

Since then, both groups have either come out against or expressed strong reservations about the concept of the SMART Act, which in any event has come off Congress's front burner.

The question now remains is whether state lawmakers and regulators will go their separate ways in terms of a model law, or again try to hammer out a compromise for the sake of uniformity.

Texas, under the leadership of State Rep. Craig Eiland, D-Galveston, has adopted a market conduct model law that is viewed by industry even more favorably than the original NCOIL proposal, that was modified to meet regulator objections.

"I think what we will now do is take a look at the original NCOIL model law and bring some form of that back for discussion in March," said Paul Donohue, who serves as NCOIL's federal liaison in Washington.

Mr. Eiland, who is also NCOIL's outgoing president, said the next year could serve as an opportunity to see how effective the industry-backed reforms will be in modernizing the market conduct process.

The lawmakers will meet in early March in Fort Lauderdale.

Among the issues at stake, according to Mr. Snyder, is how much each state should defer to other state's market conduct examinations and conclusions, along with how confidential market conduct results should remain, particularly from the plaintiff's bar who could use them as lawsuit fodder.

Also at stake is how much discretion state regulators should have to market conduct investigations.

A uniform market conduct model law was only one facet of an overall reform of the process that included reliance on market data trends, rather than traditional periodic exams, and greater coordination among states of the exams.

Oregon Administrator Joel Ario, who served as point man for two years on the market conduct reform process for the NAIC, said he believed most state insurance departments had the authority to institute such reforms, regardless of any overall market conduct law, and was therefore not discouraged that the whole process was opening up again.

As to whether he will once again attempt to forge a compromise between the two groups, he said he would have to talk to his counterparts from other states to see if that effort would be worthwhile.

The NCOIL decision to review the market conduct issue came despite a letter of opposition from a consumer advocate.

Birny Birnbaum, executive director of the Austin, Texas-based Center for Economic Justice, wrote NCOIL that his group viewed proposed changes to the NCOIL/NAIC Market Conduct Model Law "as an aggressive attack against consumer protection that severely limits regulators' ability to protect insurance consumers from market conduct abuses."

"We not only oppose the proposed changes, but we will be asking the NAIC to withdraw its accreditation of Texas because of that state's passage of this law," he added. "The law passed by Texas, which Rep. Eiland wants to make into a national model, leaves the Texas Department of Insurance with an inadequate regulatory framework to carry out its responsibilities to protect insurance consumers and, consequently, should no longer be recognized with an accreditation that suggests otherwise."

Former NAIC president Ernst Csiszar was the driving force behind the joint NAIC-NCOIL model, urging the compromises needed to make the document palatable to both sides to impress federal lawmakers. But since then he resigned his post to assume the presidency of the Property Casualty Insurers Association of America (PCI), which is one of the main proponents to going back to the original NCOIL document.

Mr. Csiszar was succeed by Pennsylvania Insurance Commissioner Diane Koken, who has taken a much dimmer view of the SMART process and has come under fire from federal lawmakers for her seeming disinterest in the process.