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SEC And Insurance Departments Collaborate On Company Exams

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SEC And Insurance Departments Collaborate On Company Exams
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The Securities and Exchange Commission is participating with state insurance departments in collaborative joint examinations of companies that are focusing on how consumer information is protected, according to interviews.

The SEC has worked with the Nebraska and Texas insurance departments, and possibly the New York department. However, at press time, the New York department could not confirm a joint effort with the SEC. The SEC declined comment.

In Nebraska, Director Tim Wagner says a regularly scheduled market conduct examination was conducted on Mutual of Omaha Insurance Company, Omaha, Neb. Regularly scheduled exams are done every four years. They differ from targeted exams undertaken if a specific problem arises.

Jim Nolan, a Mutual of Omaha spokesman, says the market conduct examination has not yet been finalized and declined comment.

The exam focused on privacy and the safeguarding of information, according to Wagner. The SEC examined the broker-dealer operations and the department took responsibility for examining insurance operations, he says.

The exam was a collaborative effort with staff from both regulatory entities working on the project at the same time, he adds.

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The Texas department also confirmed that the SEC has worked with it on an examination looking at how privacy is handled.

USAA Group, San Antonio, Texas was examined, according to Mark Hannah, a department spokesman. The joint exam with the SEC took place over a period of 2-3 weeks in February and addressed financial privacy issues, he adds. It was not described as a market conduct exam, Hannah says.

USAA confirmed the current review of privacy issues related to the Gramm-Leach-Bliley Act of 1999. It noted that the review was to see how the two regulatory entities could work together.

Collaboration and more efficient market conduct regulation is an effort that regulators at the National Association of Insurance Commissioners have been grappling with this past year. The focus on more efficient regulation is driven by competition from other financial services industries.

A pilot on interstate collaboration is currently being developed and now consists of six states: Iowa, Kansas, Nebraska, North Dakota, Ohio and South Dakota.

One issue the pilot group will address, Wagner says, is how to keep information confidential. Confidentiality statutes and regulations will need to be examined to make sure participating states can share information, he adds.


Reproduced from National Underwriter Life & Health/Financial Services Edition, July 1, 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.