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Tackling Market Conduct Reform

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Regulators, insurers and a consumer representative recently discussed what direction the work on streamlining and coordinating market conduct processes should take.

The conversation, part of an effort of the National Association of Insurance Commissioners, was mainly conceptual, with detail work to follow later.

The working draft of the market analysis program draft document outlines the purpose, focal point and data sources for regulators’ market conduct efforts.

During the discussion, Birny Birnbaum, executive director with the Center for Economic Justice in Austin, Texas, said the document needs to focus on identifying general business practices that harm consumers. The point was generally agreed upon.

Joel Ario, Oregon insurance commissioner and chair of the ad hoc market analysis working group, agreed with a point raised that market analysis and coordinating regulatory responses to problems should be looked at separately.

Ario said that as an approach to gathering data for market conduct purposes is developed, it is important to request data that will be useful. He said in Oregon, for example, efforts have been made to eliminate unnecessary market conduct data reports.

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The issue of gathering data was raised by several trade groups including the American Association of Health Plans in Washington, the National Association of Independent Insurers in Des Plaines, Ill., and the National Association of Mutual Insurance Companies in Indianapolis.

“New data collection should only be considered after establishing that such data is not currently available and conducting a cost/benefit analysis,” Randi Reichel, AAHP executive director, state affairs wrote in comments.

The NAII will question what data is being requested, why the data is needed, how it will be used and who will have access to it, said Don Cleasby, assistant general counsel.

Although any attempt to bring uniformity and consistency to the market conduct process is a positive, the “notion” of a national database to assist in monitoring large companies is one that “remains to be seen,” according to Dave Reddick, NAMIC market regulation manager.

In written comments, Lenore Marema, vice president-legal and regulatory affairs with Alliance of American Insurers, Downers Grove, Ill., said members were concerned examinations be focused on correcting problems and insurers be given an opportunity to correct problems before they are fined.

Additionally, Marema wrote that a market conduct process should begin with consumer complaints “as a compass for state insurance regulators” starting a review of a company.

Reproduced from National Underwriter Life & Health/Financial Services Edition, October 15, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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