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Regulation and Compliance > State Regulation

NAIC Consumer Reps Make Case For Market Analysis

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Consumer advocates finally got a chance to comment on a controversial market conduct analysis program that state insurance regulators will vote on in late September.

During a special teleconference July 28, state-funded consumer advocates emphasized the importance of the project, which would establish a procedure for collecting and storing market-conduct data from insurers. It would also determine which data from the project should be made public and which should be kept confidential.

The special teleconference was held in response to complaints of funded consumer representatives of the National Association of Insurance Commissioners, Kansas City, Mo., that state insurance regulators were hearing comments from industry representatives, while consumers were not receiving the same opportunity to be heard.

When questioned about the cancellation of a July 8 teleconference call in which commissioners at the NAIC were expected to vote on the project, Montana Insurance Commissioner John Morrison said that the organization decided to cancel the meeting following the resignation of Catherine Weatherford as NAIC executive vice president and CEO. The commissioners will discuss the matter during a gathering in Chicago in August, and the NAIC will vote on the issue during its fall meeting in Washington at the end of September, Morrison said.

Consumer representatives offered reasons why it was important that data be available to the public, including:

–The availability of “tens of thousands” of data points of financial information of companies but no such availability of market conduct data.

–The data project could establish a procedure for truly evaluating the merits of making individual data elements public or keeping them confidential.

–A lack of proof that industry claims that trade secrets would be violated or that there would be an “avalanche of lawsuits.”

–The ability to create a system that would be both efficient and effective, streamlining the market-conduct process while targeting problems.

–The success of the Home Mortgage Disclosure Act, which requires public access to mortgage data, despite similar warnings about trade secret disclosures and lawsuits made by the mortgage industry.

–The need for consumer reps to be able to point to tangible evidence when asked by consumers to provide information on “reputable” insurers.

Washington Insurance Commissioner Bill Kreidler noted that his state as well as several others have laws that treat market conduct data as confidential. In these states, laws would have to be amended, he added.

Montana’s Morrison, who is also chair of the NAIC’s Market Regulation and Consumer Affairs “D” Committee, the originator of the proposal, said that NAIC is currently doing legal homework on 2 points: whether state laws are broad enough to preclude the sharing of data, which may be the case in 5 states; and whether the NAIC could enter into agreements with those states to keep the data confidential, even if the NAIC received a subpoena.

Oklahoma Insurance Commissioner Kim Holland said aggregated data would be helpful to regulators and pointed out that data in market conduct exams is often made public anyway. So it would really be a matter of at what point the data would be made public, Holland said.

NAIC President and Kansas Insurance Commissioner Sandy Praeger called the current process “cumbersome.”

“The process really addresses industry concerns about multiple exams in multiple states,” he said.


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