Industry trade groups complained about control of databases they say is being exerted by the National Association of Insurance Commissioners, Kansas City, Mo.
During an industry liaison meeting with regulators, Michael Lovendusky, a representative with the American Council of Life Insurers, Washington, questioned the handling of a fingerprint database that is being developed by the National Insurance Producer Registry and the NAIC. Lovendusky told commissioners and regulators at the session that what was supposed to be a joint effort to facilitate collection of producer fingerprints in conjunction with a fingerprint model act is now an effort “to reduce NIPR to an operating subsidiary of the NAIC.”
Lovendusky said that the intent to assume control of the fingerprint repository is “a breach of understanding by which we have faithfully operated all these years.”
The lack of transparency of databases as well as the “arbitrary assertion” of ownership of data provided by the industry concerns insurers, said Diana Marchese, an industry liaison representative with the ACLI. In addition, she said NAIC is creating databases that are in competition with the private sector. And she noted that the NAIC’s tax status was that of a not-for-profit. In addition, she said, there was the expectation that the industry would pay for construction of databases.
In a recent interview with National Underwriter, Andrew Beal, NAIC general counsel, said NAIC is not trying to absorb the NIPR. He said that the two bodies are separate entities: the NAIC is a 501c(3) incorporated in Delaware and NIPR is a 501c(6) incorporated in Missouri. A decision was made to bring the database under NAIC auspices, he continued, because NAIC wants to ensure that the confidentiality of data is ensured.
Dave Snyder, a representative with the American Insurance Association, Washington, raised the issue of the anti-fraud database, telling regulators at the liaison meeting that while the concept is a good one, making the NAIC a collector of data that then passes through to the states is not a good idea. In trying to characterize the NAIC, he asked, “Is it a state? A nonprofit? What is its status?”
Speaking of an auto database, Snyder said AIA supports the NAIC’s involvement as a liaison between the industry and the motor vehicle bureau but has concerns about confidentiality of data shared if the industry starts collecting such information.
“These two databases are different from the data the NAIC normally collects because they contain information on millions of people that are usually not regulated by the NAIC,” he says. “It is good that the NAIC is concerned about these issues, but the NAIC should not be the database.”
The market conduct annual statement project was raised by Dave Reddick, a representative of the National Association of Mutual Insurance Companies, Indianapolis. Twenty-three states will be collecting data from insurers next year, he said. This will add another layer of regulation, he said.