Industry Searching For Best Path To Market Conduct Exam Efficiency

Industry Searching For Best Path To Market Conduct Exam Efficiency

By

New Orleans

Everyone in the insurance industry seems to agree that state regulators should be more efficient at assessing insurers sales and marketing practices. But speakers who addressed the issue here at the National Association of Insurance Commissioners summer meeting disagreed about the best ways to increase efficiency.

Industry representatives asked the Kansas City, Mo.-based association to encourage states to go back to basics.

When regulators are talking about “big sky” issues, they should remember to look at the ground once in a while and consider small, practical ways to make the exams more efficient, according to Don Cleasby, assistant general counsel with the National Association of Independent Insurers, Des Plaines, Ill.

Lenore Marema, a vice president at the Alliance of American Insurers, Downers Grove, Ill., said a step as simple as giving examiners better training could make a big difference.

Industry representatives also emphasized the need for greater uniformity in states exam policies, and efforts to coordinate exams on a multistate basis.

The American Council of Life Insurers, Washington, would like to see state regulators increase uniformity by making better use of the Market Conduct Examiners Handbook, according to Bryan Cox, ACLIs director of state relations. The handbook is a “well-thought-out document,” he said.

Ohio Director Lee Covington said there is a need for more targeted market conduct examinations. He said general data collected from an NAIC exam database was used by the department to cull information on Ohio companies.

The information indicated that, as ranked by premium, of the top 70 life companies, representing 83% of the Ohio market, 25 had not been examined in the past four years.

Of the top 70 property-casualty companies, representing 75.7% of the Ohio market, 25 had not been examined during the four years.

Covington said he believes that the data points generally to the need for more targeted market conduct exams.

He added that conducting exams by issue might be more efficient than conducting a company exam. For example, he said that in response to consumer concerns over health claims payments, the Ohio department pulled 10.8 million claims that resulted in fines for 7 health insurers.

Some regulators spoke of giving multistate regulatory zones the ability to conduct exams for many states at the same time, to eliminate the problem of insurers facing demands for the same information from 50 states.

“A zone concept creates efficient oversight,” said Nebraska Insurance Director Tim Wagner.

A “zone system can really bring rationality and uniformity to a system,” Cox agreed.