By

Philadelphia

Market conduct is a job that “you cant do all by yourself,” regulators were told by a consumer advocate.

Citing a laundry list of recent market conduct problems that ran the gamut from vanishing premiums and credit scoring to race-based premium issues, Birny Birnbaum, executive director with the Center for Economic Justice, Austin, Texas, said the sheer resources needed to effectively monitor market conduct suggests a need for collaboration.

“Recognize that you cant do it all yourself and see who can help,” Birnbaum said during the summer meeting of the National Association of Insurance Commissioners.

Both consumer advocates and insurers can play a role, he added, citing the possible use of both self-critical reports put together by individual companies and the work of consumer groups in the fair housing area.

Several commissioners expressed support for having information more publicly available.

“The NAIC needs to take a hard stand in making information public,” said Jim Bernstein, commissioner of the Minnesota Bureau of Insurance.

NAIC Secretary Treasurer and Illinois Director Nat Shapo said the process needs to include self-critical analysis as well as the participation of the public.

Regulators and industry participants are testing pilot projects to better target market conduct outliers.

Two approaches are being looked at. One is a How-to Guide approach that would use existing data to flag any problems that arise. Missouri currently is using this approach.

The American Council of Life Insurers, Washington, has expressed support for this approach. During a session with regulators, Linda Lanam, ACLI vice president and deputy general counsel, supported looking at current information and “drilling down if needed.” Such an approach could create “uniformity, consistency and transparency,” she added.

The second approach is data analysis. A market conduct annual statement pilot program is collecting data between July 1, 2001 and June 30, 2002. The pilot includes 10 states: Arizona, California, Illinois, Maryland, Missouri, Nebraska, Ohio, Oregon, Pennsylvania and Wisconsin.

The life insurance annual statement will encompass the 100 highest premium volume companies (187 when company groups are considered). The property-casualty annual statement will comprise 90% of the market which will be required to report data.

Another piece of the overall NAIC market conduct effort is work on interstate market conduct examinations. Six states have now signed on to an agreement: Iowa, Kansas, Nebraska, North Dakota, Ohio and South Dakota.

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


Reproduced from National Underwriter Life & Health/Financial Services Edition, June 17, 2002. Copyright 2002 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.