Market Conduct Data Collection Project Is Ready To Go

By

New Orleans

A data collection project designed to streamline market conduct efforts is “ready to go,” according to Sue Stead, an Ohio regulator who helped to develop the pilot project.

Along with a “how to” guide designed to provide regulators with a template for targeting market conduct resources, the project was discussed here during the fall meeting of the National Association of Insurance Commissioners.

Insurers are supportive of the concept of targeting market conduct examinations but still have some concerns, which they expressed. Regulators noted that the data call and analysis that is expected to begin at the end of September with a request to life insurers is a pilot that can be fine-tuned over time.

Chief among insurers concerns is the confidentiality of material provided to pilot states. Insurers are concerned that if confidential information becomes a matter of public record, insurers could become vulnerable to class action lawsuits.

The majority of states participating in the project say they can keep information confidential, but a few states say they are still uncertain about this. The uncertainty, according to interviews, ranges from the need for confirmation from legal staff that information is protected to a department response that market conduct information has always been a matter of record and information provided to the pilot will continue to be public.

Linda Lanam, a vice president with the American Council of Life Insurers, in Washington, said confidentiality is an important issue because confidential information that is made public can be “misconstrued” or requested as part of class action litigation.

Lanam also asked whether data would have to be provided to companies licensed in all 10 pilot states or any of the pilot states.

When regulators said life companies in any state would be requested to provide data for the collection call, Lanam said that an apples-to-oranges comparison could result. Ratios and numbers will differ for companies that operate in one state from those operating in a number of pilot states, she explained.

Don Cleasby, assistant general counsel with the National Association of Independent Insurers, Des Plaines, Ill, said that proprietary information collected and analyzed in a different way from traditional market conduct examinations could conceivably open up private company information to public records.

Ohio Director Lee Covington stressed the need for insurers to clarify what they would consider proprietary information to cover.

But Kevin Hennosy, executive director of Spread The Risk, Inc., Kansas City, Mo., said, “confidentiality concerns expressed by the industry are overblown.”

Much of the data being requested is innocuous, he said. “I am tried of every piece of paper being called privileged or a trade secret.”

Even as the data analysis component of the market conduct project launches, a second piece of market conduct streamlining is taking place.

A discussion of a how-to guide for regulators will focus on complaints, market share, and supplemental pages filed with an annual statement, according to Cyndi Amman, a Missouri regulator.

It is expected that the guide will be exposed for comment in October and acted on in December, she added.

When finalized, the guide could facilitate analysis and selection of companies that need market conduct oversight, Amman said.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 16, 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.