Market Regulation and Consumer Affairs (D) Committee - Summer 2025

The Market Regulation and Consumer Affairs (D) had a busy six months through June of this year. This mid-year report provides a summary of the three priorities of the Market Regulation and Consumer Affairs (D) Committee, a summary of work completed in the first half of the year, and a preview of what lies ahead for the rest of 2025.

Market Regulation and Consumer Affairs (D) Committee Priorities

Pharmacy Benefit Managers (“PBM”) Examination Standards

The Pharmaceutical Benefit Management Regulatory Issues (B) Working Group transitioned from the Health Insurance and Managed Care (B) Committee to the Market Regulation and Consumer Affairs (D) Committee reflecting a shift from policy development to operational priorities of market conduct, examinations, and licensing. The newly appointed Pharmacy Benefit Management (D) Working Group (“PBM (D) Working Group”) is primarily focusing on developing examination standards for PBMs, while the new Prescription Drug Coverage (B) Working Group is focusing on broader prescription drug coverage issues.

One of the key goals of the PBM (D) Working Group is to provide consistent guidance to ensure more predictable and fair market regulation. To advance this work, regulator subject matter experts are developing draft examination standards addressing the following topics: (1) general structure of the PBM exam and operations/governance of PBMs; (2) engagement between PBMs and pharmacy networks; (3) PBM relationships with clients; (4) PBM relationships with consumers; and (5) drug reviews/clinical issues. The PBM (D) Working Group will circulate the draft examination standards for public comment either before or soon after the NAIC Summer National Meeting. The PBM (D) Working Group anticipates adopting final examination standards by the end of the year.

Secondary to these efforts, the PBM (D) Working Group is exploring the development of licensing and registration standards for PBMs to provide greater uniformity in the licensing process. Finally, the PBM (D) Working Group is serving as a forum to share best practices, examination findings, and compliance issues encountered with PBM regulation.

Cybersecurity Incident Response Framework

Another new initiative this year for the Market Regulation and Consumer Affairs (D) Committee is the development of a cybersecurity incident response framework. The purpose of this initiative is to assist the NAIC Members in assessing the significance of cybersecurity events and develop protocols for multistate coordination after a cybersecurity event has occurred. While still under consideration prior to public input, there are four basic concepts being considered: (1) standardized criteria to assess the impact of a cybersecurity event to trigger the need for multistate coordination; (2) procedures to quickly identify a lead state to coordinate the efforts of state departments of insurance in addressing a cybersecurity event; (3) expectations for the lead state with an appropriate balance between individual state responses and coordinated efforts through the NAIC; and (4) the roles of the established NAIC Working Groups: Cybersecurity (H) Working Group, Market Actions (D) Working Group, and Financial Analysis (E) Working Group. It is anticipated that additional details will be provided during the NAIC Summer National Meeting or soon after the meeting.

Transparency of Market Actions (D) Working Group (“MAWG”) and Coordination of State Investigations

While providing the necessary confidentiality protections, the third priority for the Market Regulation and Consumer Affairs (D) Committee is to provide greater transparency regarding current marketplace issues discussed by MAWG and the general processes of MAWG.

One of the first initiatives this year has been for each state to reaffirm its Collaborative Action Designee (“CAD”), who has the responsibility of coordinating multi-state market conduct actions. As explained at the NAIC Spring National Meeting by David Buono (PA), Chair of MAWG, the Market Actions (D) Working Group relies on state CADs to deliver information to their agency’s leadership in a fully confidential manner. Mr. Buono also reminded everyone that MAWG does not have independent regulatory authority and that any examination or other regulatory intervention is completed under an individual state’s authority. MAWG then serves as the national forum for discussion, information sharing, and guidance for structuring resolutions and settlements. MAWG also serves the important goal of enhancing state regulation by reducing duplicative efforts and promoting efficiencies which ensure that market issues are adequately addressed.

As announced during the NAIC Spring National Meeting, MAWG is currently discussing issues about mental health parity, annuity suitability, producer/agent items, and claims and underwriting issues such as the use of aerial photos, field inspections and estimation processes.

While MAWG addresses activities of licensed entities, the NAIC formed a Coordinated Market Investigation (D) Subgroup in 2024. This subgroup, which reports to MAWG, is charged to facilitate interstate communication and coordinate collaborative state regulatory activities involving non-traditional market actions. While less formal than MAWG, this subgroup has been focused on concerns regarding unlicensed entities and how best to coordinate investigations and enforcement efforts on these entities. Some of the challenges the subgroup and MAWG will continue to address this year include jurisdictional issues over unlicensed entities, coordination and communication of confidential data across states, and different legal and procedural state requirements.

Consumer Facing Agent/Broker Look Up Tool

During its April 30, 2025 conference call, the Market Regulation and Consumer Affairs (D) Committee discussed the development of a NAIC consumer-facing agent broker search tool. The concept for this tool arose under the Improper Marketing of Health Insurance (D) Working Group as a way for consumers to obtain the license status of an individual selling insurance products. This initiative became part of the NAIC’s marketing of insurance strategic regulatory priority in 2023 and 2024. During this call, the Market Regulation and Consumer Affairs (D) Committee reviewed an NAIC prototype and received a presentation regarding FINRA’s BrokerCheck. The Market Regulation and Consumer Affairs (D) Committee will continue to discuss potential next steps and provide recommendations to the NAIC Members for the creation of a centralized public search tool later this year.

Market Conduct Annual Statement (“MCAS”) and Market Analysis

The Market Conduct Annual Statement Blanks (D) Working Group is using 2025 as a maintenance year to clarify definitions used in existing MCAS lines. While a very technical focus for 2025, the charge of the Market Conduct Annual Statement Blanks (D) Working Group is to ensure consistent reporting of data across the industry and from year-to-year. It is important to note that the Market Conduct Annual Statement Blanks (D) Working Group has adopted edits to the following MCAS lines: Other Health, Private Passenger Auto, Homeowners, Lender Placed Home and Auto, Pet Insurance, Disability Income, Long-Term Care, and Short-Term Limited Duration. Any proposed changes adopted by the Market Regulation and Consumer Affairs (D) Committee by August 1, 2025 will be presented to the NAIC Membership for adoption at the NAIC Fall National Meeting. Companies will then be required to report 2026 data in 2027 according to the revised MCAS Blanks and Definitions. 

The Market Analysis Procedures (D) Working Group does not plan to recommend a new line of business for the MCAS and is focusing its effort on improving analysis techniques used with existing MCAS data. More specifically, the Market Analysis Procedures (D) Working Group is reviewing the NAIC’s Market Analysis Prioritization Tool (“MAPT”) and the Market Analysis Review System (“MARS”) and will make recommendations on how to improve these tools. The Market Analysis Prioritization Tool (“MAPT”) is an NAIC tool designed by state insurance regulators to assist them in prioritizing which companies warrant further analysis and scrutiny. The Market Analysis Review System is a centralized system used by state insurance regulators to document and share the results of their market analysis review.

Public Adjuster Licensing Model Act

Completing work that began during the 2024 NAIC Spring National Meeting, the NAIC Members adopted amendments to the NAIC Public Adjuster Licensing Model Act during the 2025 Spring National Meeting. The Model Act was amended to strengthen regulatory standards governing the conduct of public adjusters for the following four issues: (1) individuals acting as unlicensed public adjusters; (2) contractors who are also acting as public adjusters on the same claim; (3) inappropriate assignment of benefit rights; and (4) excessive fees charged by public adjusters.

Some of the more significant revisions included amendments to prohibit a public adjuster from having a financial interest in any aspect of a claim, other than the salary or fee for public adjusting services and the implementation of a 10% fee cap on catastrophic claims and a 15% fee cap for any insurance claim. The Public Adjuster Licensing (D) Working Group decided specific fee cap recommendations were necessary to provide stronger guidance on what is considered reasonable compensation. Finally, the Public Adjuster Licensing (D) Working Group added a new section addressing the Assignment of Benefits which clarifies the rights and benefits under the insurance policy may only be assigned to a person who has the legal authority to represent the named insured, or to a subsequent owner of the property to whom title is transferred, and may explicitly prohibit assignment of rights and benefits to any other person, including a property repair contractor.

1033 Waiver Template

Federal law provides penalties for a person who: (a) has been convicted of a felony involving dishonesty or breach of trust; and (b) willfully engages in the business of insurance affecting interstate commerce, unless the person receives written consent from the state insurance regulatory official with appropriate jurisdiction. See, Violent Crime Control and Law Enforcement Act of 1994, 18 U.S.C. §§1033 and 1034. To create a more uniform and simplified process for individuals seeking a 1033 waiver from state insurance regulators, the Producer Licensing (D) Task Force circulated a draft template for comment and plans to consider the adoption of the template during the NAIC Summer National Meeting.

AI Systems Evaluation Tool Kit

The Big Data/Artificial Intelligence (H) Working Group is charged to identify existing tools, resources, materials, and training that will assist and guide regulators in their review of AI systems used by licensees, and develop new regulatory tools or regulatory guidance to assist regulators in their review of AI systems. To help fulfill this charge, the Big Data/Artificial Intelligence (H) Working Group circulated draft “exhibits” to supplement existing market conduct, product review, form filing, financial analysis, and financial examination review procedures. These optional exhibits allow regulators to determine the extent of AI systems usage for a company and whether additional analysis is needed focusing on financial and consumer risk. The exhibits are classified as follows: Exhibit A: Quantify Regulated Entity’s Use of AI Systems; Exhibit B: AI Systems Governance Risk Assessment Framework (Two Options: Narrative or Checklist); Exhibit C: AI Systems High-Risk Model Details; and Exhibit D: AI Systems Model Data Details. As this work progresses, the Big Data/Artificial Intelligence (H) Working Group will coordinate with the Market Conduct Examination Guidelines (D) Working Group.

Regulatory Information Retrieval System (“RIRS”) Coding Updates

NAIC efforts continue on the implementation of a revised coding schematic for the NAIC’s Regulatory Information Retrieval System. The coding changes include: a new field to distinguish routine administrative actions from actions that are a result of an infraction or financial impairment; a new field to link related RIRS records; a new “Line of Business” field; revisions to the origin codes, reason codes, and disposition codes to provide a more logical data structure; and functionality for states to add attachments to reported RIRS action. NAIC staff will continue to work with states to implement the coding changes in 2025 and the first half of 2026.

Updates to the NAIC Market Regulation Handbook

The Market Conduct Examination Guidelines (D) Working Group is drafting examination standards for pet insurance, updating the examination guidelines for conducting travel insurance examinations, and developing regulatory guidance regarding the review of accelerated underwriting based on the Regulatory Guidance Document adopted by the Accelerated Underwriting (A) Working Group. In addition, the Market Conduct Examination Guidelines (D) Working Group is discussing the development of pet insurance standardized data requests for in-force policies, claims and complaints.

Market Regulation Self-Certification Program

The Market Regulation Certification (D) Working Group is working to implement the Voluntary Market Regulation Self Certification Program. States have started to submit their voluntary market regulation self-certification reports. Depending on the progress for the states’ self-certification submissions this year, the Market Regulation Certification (D) Working Group will begin discussing the next steps to developing processes for accepting and reviewing applications for full certification under the Voluntary Market Regulation Full Certification Program.

Additional information about the activities of the Market Regulation and Consumer Affairs (D) Committee, its Task Forces, and Working Groups, can be found at the following Weblink on the NAIC Website: https://content.naic.org/cmte_d.htm.

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Tim Mullen, JD, MBA, CPCU, CIE, MCM is the Director of Market Regulation at the National Association of Insurance Commissioners. He joined the NAIC in 1997 and was with the Missouri Department of Insurance prior to joining the NAIC. In addition to his work in state government, he worked for Aetna Insurance and was a practicing attorney before joining Aetna. He is a member of the Missouri Bar and the Kansas Bar, the 2009 recipient of the Paul L. DeAngelo Memorial Teaching Award from the IRES Foundation, and past president of the Kansas City CPCU Chapter.