NAIC Advances Simpler Fingerprint Model

The preliminary results are from 15 PCI member companies or member groups. Cleasby said that other PCI companies still need to submit results and the results of other trade groups including the American Insurance Association, the National Association of Mutual Insurance Companies, Indianapolis, and the American Council of Life Insurers, Washington, still will have to be collected and reviewed.

But to date, the preliminary data shows that there were 27 regulatory activities in 2003, 51 in 2004, and, 41 in 2005. In 2003, the PCI survey indicated that the activities were broken out as follows: 2 correspondence, 4 targeted information gathering, 6 desk audits, 1 investigation, 5 targeted exams and 9 comprehensive exams. In 2004, the breakout was as follows: 12 targeted information gathering, 2 policy and procedure reviews, 2 interrogatories, 8 desk audits, 1 self-audit, 10 targeted exams and 16 comprehensive exams. And, in 2005, the results looked as follows: 1 correspondence, 8 targeted information gathering, 2 interrogatories, 7 desk audits, 2 self-audits, 1 investigation, 7 targeted exams and 13 comprehensive exams.

All of the reported targeted examinations, according to the PCI, were single state. Three of the comprehensive exams, it continued, were multistate, and all others were single state.

Five companies reported some improvement in market regulation over the past 3 years, 5 some improvement, 3 said there was minimal improvement, and, 3 reported no change.

Preliminary data, according to Linda Lanam, ACLI vice president-annuities, Washington, suggests that the number of examinations have come down slightly. There is some reduction in the total number of examinations, she continued, but there are still a significant number of them. But she says information from a few more companies must still be collected and other information evaluated before a full report of the findings can be detailed.

The goal for both regulators and companies should be the same, namely how to improve companies results when market conduct criteria are applied, said Lanam. In order to achieve this, insurers need a clearer idea of what the data means. So, for instance, if there is a ratio, what does the ratio mean and in the context of other companies and their market analysis findings, she explained.

Another issue that continues to be of concern, according to Lanam, is the confidentiality of market conduct data for companies.

Cate Paolino, AIA senior counsel, says issues that are important to AIA members include the confidentiality of company information and uniformity in definitions. For instance, she explained, it is important that the definition of complaint is uniform so that companies can look at information uniformly across state lines. “How it is defined will be an extremely crucial discussion. Only verified and justified complaints should be included.

On the issue of market analysis, Paolino said that “an insurer should know what specific information triggers an examination and it should have access to information about it within the NAIC databases.”