Market conduct exam is a regulatory review conducted by state insurance departments to evaluate an insurer's or producer's business practices, including sales, advertising, underwriting, claims handling, replacements, and complaint resolution. The goal is to ensure that companies and intermediaries comply with insurance laws, treat consumers fairly, and maintain appropriate controls. Market conduct exams may be routine or triggered by patterns of complaints or specific concerns, and they often result in reports, corrective action plans, fines, or other remedies when deficiencies are found.

In everyday operations, carriers, BGAs, and agencies are mindful of market conduct exams when designing procedures, training producers, and documenting sales practices. Advisors encounter the effects of market conduct oversight through requirements such as suitability forms, replacement notices, disclosure documents, and advertising compliance reviews. When regulators focus on particular products, such as indexed annuities or long term care, market conduct exams can influence how carriers implement new rules, restrict certain practices, or adjust compensation structures. Producers who maintain good documentation, follow scripts and forms, and place the client's interest first are better positioned if their cases are ever reviewed. By understanding market conduct exam purpose and scope, advisors appreciate why compliance processes exist and how they protect both consumers and the long term reputation of the industry.