After nearly four years in the works, the National Association of Insurance Commissioners model investment law for the insurance industry is expected to be completed by the end of 1995.
But the model law, which will be used by individual states in regulating insurance company investment portfolios, may not be as stringent as originally proposed.
One provision that remains from early in the drafting process would limit commercial mortgage investments to a maximum of 30%. A proposal to limit junk bonds to 20% of the portfolio also remains.
A provision that would have made insurance company board members fiduciaries has been removed. The NAIC modified the draft to reflect standards in most large corporations requiring them to act in a "prudent fashion."
The issue of derivatives and restrictions on investment pools have yet to be addressed.