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NAIC Data Collection Scuffle Continues

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A controversial proposal to collect data and store it nationally with the National Association of Insurance Commissioners continued to draw criticism even as regulators insisted that it would be better for both consumers and insurers themselves.

Further discussion is planned and a vote is possible by the end of June, according to Sandy Praeger, Kansas insurance commissioner and NAIC president, who made her comments during the NAIC’s plenary meeting.

She noted the dissension on the issue but also said that in order for market conduct data to be included as a supplement to the annual financial statement, a decision would have to be made before July 1. The beginning of July is a deadline, she said, because vendors need to have information so they can begin preparing the financial statements, known as blanks, for Jan. 1, 2009 implementation.

Toward that end, the blanks committee created a place marker for the market conduct data page in case a proposal is approved by the full NAIC body.

The discussion started in the legislative liaison committee at the summer NAIC meeting here when legislators and regulators sparred over just how much vetting the proposal received.

Legislators were not included in the development of this project and were not allowed to provide valuable input, maintained Rhode Island state representative Brian Kennedy, D-Hopkinton, and president of the National Conference of Insurance Legislators, Troy, N.Y.

Kennedy said NCOIL has its own market data model and said that had regulators at the NAIC included them in the discussion, legislators could have provided valuable input.

Montana Insurance Commissioner John Morrison, chair of the Market Regulation and Consumer Affairs “D” Committee, reminded Kennedy that there was an open discussion during the spring NAIC meeting and then again on May 28 when the NAIC’s executive committee held a conference call to discuss the issue (see NU, June 2).

Discussion continued throughout the summer meeting in various venues ranging from the executive committee and plenary sessions, market conduct committee sessions, and consumer and industry liaison sessions.

Insurers for all the major life and property-casualty trade organizations said the proposal needed more consideration. The confidentiality of data and its possible exposure to both class action attorneys and other insurers who would use data for competitive reasons warranted more assurance that any data submitted would be protected, they said. Among the organizations addressing the issue were the American Council of Life Insurers and the American Insurance Association, both in Washington, the National Association of Mutual Insurance Companies, Indianapolis, and the Property Casualty Insurers Association of America, Des Plaines, Ill.

While they said they support the concept of greater uniformity and ease of filing, they also questioned giving the NAIC the power to collect data and asked what would be done with it.

In response to inquiries about whether the data would be aggregated and then sold like financial data currently is, the NAIC’s Praeger said it would cost more to prepare the data for sale than the revenue it would generate. (Note: Highline Data, an affiliate of National Underwriter, is a distributor of such data.)

Consumer advocates including Birny Birnbaum, a NAIC funded consumer and executive director of the Center for Economic Justice, Austin, Texas, said such data would provide consumers with a clearer market conduct picture and would be useful to regulators in ensuring proper market conduct behavior.

The “D” Committee’s Morrison said the proposal would not only create more uniformity of regulation but would also make it simpler for companies to file data in one place than state by state. He noted that insurers had asked for a simpler way to file the data.

One regulator told National Underwriter that while the project might be a worthy one, the blanks were not the place for such data because it would make it too cumbersome.