The road to efficient market conduct annual statements may have a few speed bumps, namely, confidentiality concerns and the amount of data needed to actually get the job done.
But regulators and insurers are currently talking out issues so that a smoother, more efficient market conduct oversight process can be developed by the National Association of Insurance Commissioners, Kansas City, Mo.
A pilot program among states is being considered to help determine how to better share data and a year-end goal of having a more permanent program in place is achievable, according to Sue Stead, assistant director of the office of investigative and licensing services with the Ohio insurance department. The pilot would be explored as an alternative to a national data collection program that has been discussed.
States that are expressing interest in participating in the pilot include: Arizona, California, Illinois, Maryland, Missouri, Ohio, Oregon and Wisconsin.
Stead, who is heading up the regulatory team examining the issue of market conduct annual statements says that the goal is to avoid duplicative market conduct examinations.
But one issue that is receiving a lot of discussion, she continues, is confidentiality concerns over collecting and housing data in a central location such as an NAIC depository.
Interviews suggest that although there may not be seamless confidentiality standards if information is shared among states, insurers feel more comfortable with states sharing information than with housing data in one place. Speaking of the possibility of class action litigation, an industry representative comments, “we’re afraid of giving away the keys to the candy store.”
Many states have confidentiality laws but they are not always consistent among states, Stead says.
Another issue that received a lot of discussion, according to Stead, is just how much data needs to be collected.
Insurers are arguing that regulators have enough data to detect problem companies.
Stead says that during a recent meeting, claims aging was one data source cited as a way of measuring market conduct. The measure looks at how long claims remain unpaid.
On the life side, the number of cancellations and nonrenewals and the number of replacements in relation to volume of new business was discussed, she adds.
Another means of determining market conduct outliers is to measure the number of complaints that a company receives directly, Stead explains.