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Regulators' Charge For 2002: Implement, Implement, Implement

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Regulators’ Charge For 2002:

Implement, Implement, Implement


The charge of insurance regulators for the coming year can be summed up in one word: Implement.

Leaders of the National Association of Insurance Commissioners say they are determined to implement initiatives that started in 2000 and got temporarily put on hold following the events of Sept. 11.

“The big challenge will be moving forward with implementation,” says Terri Vaughan, the new president of the Kansas City, Mo.-based NAIC, and Iowa insurance commissioner.

Those initiatives include speed-to-market and market conduct efforts that are now being forged by regulators and insurers.

Efforts to create a more efficient regulatory system are well underway as witnessed by work on the Coordinated Advertising Rate and Form Review Authority and on the Improvement to State-based Systems project, Vaughan continues.

But more needs to be done in order to successfully implement these programs, she says. For instance, Vaughan says that to date, just one product has been filed under CARFRA, a pilot project to create a single point of filing for products.

Work has to be done to get rid of state deviations and create a more uniform system, she says. “It will be hard work done state by state.”

This involves changing laws as well as regulations and that means working with insurers and state legislators, Vaughan adds.

Indeed, during the winter NAIC meeting this month, she exhorted insurers to help regulators as they go to state legislatures.

Mike Pickens, NAIC vice president and Arkansas insurance commissioner, cites the unprecedented progress in producer licensing.

While the World Trade Center event, “took our eye off the ball a little bit,” Pickens notes that 37 states are on board with uniform producer licensing standards. He says the full complement of 51 jurisdictions is the NAIC’s goal.

Efforts to ensure uniformity will be part of regulators’ efforts in the coming year. Pickens says that although 43 states have new privacy standards in place, more needs to be done to work with states that still need to create more uniform standards and to point out the difficulties that lack of uniformity can cause.

Nat Shapo, NAIC secretary-treasurer and Illinois insurance director, says work will continue on ensuring that there is proper treatment of policyholders and payment of claims.

Efforts will advance on issues such as race-based premiums, small face amount policies and payment of multiple policies. And, Shapo says, regulators will press to reach a successful conclusion to work on paying the claims of Holocaust survivors.

On the issue of unpaid benefits for multiple policies, a regulation will be developed that could be modeled after an Illinois regulation, according to Shapo.

Joel Ario, Oregon insurance commissioner, who is helping to head up market conduct reform efforts, says that as work progresses, a key principle will be targeting resources appropriately.

Uniformity in how exams are conducted will be another area regulators will focus on, Ario adds, and there will also be more interstate collaboration.

Ohio Director Lee Covington says he is optimistic about efforts ranging from market conduct to the likelihood of passing a commercial lines modernization model as part of speed-to-market efforts.

Covington adds that efforts to achieve operating efficiencies under the System for Electronic Rate and Form Filing are working. SERFF stats point to the ability of the NAIC to create even more efficiencies, he says. In 2001, on average, 366 filings a month passed through the SERFF system and 94% of those filings had an average 16-day turnaround, he continues. In total, there were 3,663 SERFF filings in 2001.

Important actuarial issues will also impact regulators’ work during 2002. Mike Batte, chair of the Life & Health Actuarial Task Force and a life actuary with the New Mexico insurance department, says there are two items to watch: a general nonforfeiture project and possible work on the Standard Valuation Law.

Nonforfeiture values ensure that if a policy lapses, a consumer receives some cash amount for the premiums invested in the policy. The Standard Valuation Law establishes uniform standards for valuing products.

Some pretty innovative things could come out of this work, Batte believes.

Items he says he expects to see completed include a CSO Table for determining reserves of life insurance products.

The National Conference of Insurance Legislators in Albany, N.Y., will be fully involved in working on efforts to streamline state insurance work, says Robert Mackin, executive director.

For example, NCOIL will offer a study on market conduct to regulators as they further their fine-tuning of market conduct programs, Sue Nolan, deputy executive director. The survey, by PriceWaterhouseCoopers in New York, will examine, among other things, why states perform market conduct examinations.

The National Conference of State Legislatures in Denver, Colo., will continue to examine issues including producer licensing and the uniform state adoption of consumer privacy standards to meet requirements in the Gramm-Leach-Bliley Act of 1999, says Cheye Calvo, an NCSL program manager-employee benefits and insurance issues.

Reproduced from National Underwriter Life & Health/Financial Services Edition, December 24, 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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