Regulators Hear Diversity Of Opinions On Market Conduct Surveillance

By

San Diego

Market conduct surveillance may be the right answer thats going at the wrong speed, regulators were told during the winter meeting of the National Association of Insurance Commissioners here last month.

Both consumer and insurer representatives said there is a need to put out a regulatory product so it can be tested to see what works and what doesnt work.

During the course of market conduct sessions, it was suggested by Dave Reddick, a representative with the National Association of Mutual Companies, Indianapolis, that the different pieces of the market conduct puzzle be put together by September 2003, including a How-to Guide.

The guide is being developed to offer regulators a source describing effective market conduct tools. A catalogue of regulatory tools has been developed and a second phase of the guide would offer instruction in how to use these tools.

Linda Lanam, a spokesperson with the American Council of Life Insurers, Washington, said, “it is very important we use 2003 to take a look at what is being done and to make sure that it is working. The more we can do, the more it will give rise to new things.”

Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas, suggested that rather than presenting status reports, it was important to put out a product.

But Cindy Amman, a Missouri regulator, argued for the systematic approach being taken. Many states do not know what tools are available, she said. Consequently, it is important for state regulators to first learn what is available before learning how to use these tools.

Noting that there will be a large turnover in commissioners this year, Birnbaum suggested that a one- or two-page document be written so that “when new commissioners come in, you can say this is what market conduct regulation should look like.”

However, Joel Ario, Oregon insurance administrator, noted it was not that simple to achieve a unified vision because there are different viewpoints among regulators.

Even so, there are signs that regulators are taking steps to work together more closely. A market conduct uniformity working group reported that 42 states say they are compliant in at least two of four areas of market conduct uniformity, including exam scheduling, pre-exam scheduling, exam procedures and exam reports. The goal for 2002 had been 26 states.

Jann Goodpaster, an Oregon regulator, informed interested parties that 100% of states are meeting uniformity in at least two areas.

And a market conduct examination tracking system is expected to be up and running on Jan. 1, 2003.

By Jan. 1, life insurers will also have turned in their market data call reports to regulators. That data will be culled and a report presented in March 2003, according to Sue Stead, an Ohio regulator, heading up the market analysis working group.


Reproduced from National Underwriter Life & Health/Financial Services Edition, January 6, 2003. Copyright 2003 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.