- National Association of Insurance Commissioners Initiates Development Process for Creditor-Placed Insurance Model Law
- March 6, 2013
- Law Firm: Colodny Fass Talenfeld Karlinsky Abate Webb P.A. - Fort Lauderdale Office
The National Association of Insurance Commissioners ("NAIC") has initiated the model law development process for its Creditor-Placed Insurance Model Act (#375) for possible reclassification as a "guideline."
As it currently exists, the Creditor-Placed Insurance Model Act ("Model") creates a legal framework within which creditor-placed insurance may be written and helps to maintain the separation between creditors and insurers. It also serves to minimize the possibilities of unfair competitive practices in the sale of creditor-placed insurance.
As opposed to NAIC "model laws," which are laws and regulations requiring uniform enactment, regulatory best practice "guidelines" do not require uniform adoption or a certain level of dedicated resources to implement. "Guidelines" can include handbooks, guidance, white papers and bulletins providing peer-reviewed best thinking that offers states a suite of guidance and options. Regulatory best practice guidelines are considered by the NAIC to be important and are intended to expand the number of alternatives available to members. They may also form the basis for laws and regulations implemented by states.
The NAIC's Property and Casualty Committee, which will be responsible for drafting any amendments to the Creditor-Placed Insurance Model Act, has indicated that it should be reevaluated to assure appropriate consumer safeguards are included.
However, before the Model can proceed in the process, its request for model development awaits approval on April 7 by the Executive Committee during the NAIC's 2013 Spring National Meeting in Houston, Texas.