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Regulators Trying To Improve Market Conduct Reviews

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NU Online News Service, June 13, 12:25 p.m. — Philadelphia

State insurance regulators are trying two new strategies for improving the market conduct review process.

Officials here for the summer meeting of the National Association of Insurance Commissioners, Kansas City, Mo., talked about “how to” guides and “data analysis.”

Advocates of how-to guides want to give regulators guides on techniques for making better use of existing financial statement data.

Supporters of the data-analysis approach want regulators to collect and analyze more data from bigger insurers.

Missouri officials reported that their department is already using how-to guides, and how-to guides are popular among insurance trade groups.

Four property-casualty groups — the Alliance of American Insurers, Downers Grove, Ill.; American Insurance Association, Washington; National Association of Independent Insurers, Des Plaines, Ill.; and the National Association of Mutual Insurance Companies, Indianapolis — are developing a guide that will show regulators how to use existing data on complaints, premiums, claims and defense costs to identify insurers in need of closer attention.

The American Council of Life Insurers, Washington, also favors expanded use of how-to guides.

A well-designed how-to guide strategy could lead to “uniformity, consistency and transparency,” says Linda Lanam, an ACLI deputy general counsel.

Meanwhile, an NAIC pilot program that uses the data analysis approach began collecting additional data July 1, 2001, and will complete collecting data June 30.

The pilot program includes 10 states: Arizona, California, Illinois, Maryland, Missouri, Nebraska, Ohio, Oregon, Pennsylvania and Wisconsin.

Regulators are asking for extra information from the 100 life insurers with the highest annual premium volume, and from property-casualty insurers that account for 90% of the property-casualty market.

State insurance regulators are also trying to improve the market conduct review process by combining exams.

Six states — Iowa, Kansas, Nebraska, North Dakota, Ohio and South Dakota — have signed on to a multistate market conduct exam agreement, officials said.

Additionally, Nebraska Director Tim Wagner reported that Nebraska and two other states are collaborating with the U.S. Securities and Exchange Commission on an exam of a broker-dealer.

Birny Birnbaum, executive director with the Center for Economic Justice, Austin, Texas, a consumer advocacy group, told regulators that the task of monitoring market conduct is too big for any one agency.

“Recognize that you can’t do it all yourself and see who can help,” Birnbaum said.

Birnbaum suggested that insurers could help by publishing “self-critical reports” on their own operations.

Nat Shapo, the Illinois insurance director, agreed that the market conduct review process should include self-critical analysis as well as public participation.


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