Trades See Slight Improvement In Market Conduct Process

Insurance industry trade groups say efforts to streamline the market conduct examination process have had little effect on the number of exams.

The total number of single-state exams, multi-state exams and “desk audits,” or exams conducted by regulators from their own offices, increased to 321 in 2005, from 306 in 2003, according to a survey conducted by trade groups representing life, health and property-casualty insurers.

The groups presented the results of the member survey here at the summer meeting of the National Association of Insurance Commissioners, Kansas City, Mo., at a gathering of the NAIC’s market conduct uniformity working group.

Groups that participated in the study include the American Council of Life Insurers, Washington; the American Insurance Association, Washington; America’s Health Insurance Plans, Washington; Blue Cross and Blue Shield Association, Chicago; the National Association of Mutual Insurance Companies, Indianapolis; and the Property Casualty Insurers Association of America, Des Plaines, Ill.

The ACLI says it received survey responses from 107 of its 370 members, and AHIP says it received responses from 27 large health insurers.

Figures concerning the number of exams show that the number of on-site, single-state targeted exams fell to 111 in 2005, from 127 in 2003, but that the number of on-site, single-state comprehensive exams increased to 122 in 2005, from 116 in 2003.

In the life industry, “the total numbers are down modestly but are not down as much as we would have hoped,” said Linda Lanam, ACLI vice president-annuities and market regulation.

The number of exams that took more than a month fell to 163 in 2005, from 199 in 2003, but the number that took a week or less increased only slightly, to 30 in 2005, from 28 in 2003, according to the survey.

Changes in exam costs were uneven.

The number of exams costing $200,000 or more fell to four in 2005, from 30 in 2003, but the number of exams costing $15,000 to $25,000 increased to 20, from 11, according to the survey.

In general, “the vast majority [of companies that responded] feel that they are no better and maybe worse off,” Lanam said. “People are not feeling an improvement.”

Regulators on the working group asked after the presentation if there were ways the survey process could be improved.

More refined data would help insurance companies by helping regulators fine-tine future exams, regulators said.

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GRAPHIC

The Numbers

Number Of Market Conduct Exams

Exam Type

2003