NAIC Looks At DI Best Practices

Advocates of a proposed disability claims best practices list are clashing with insurers over the need for the list.

Participants here for the winter meeting of the National Association of Insurance Commissioners, Kansas City, Mo., talked about the topic at a public hearing organized by the NAIC’s Consumer Protections & Innovations Working Group.

A total of 535,000 Americans received disability claims payments in 2007, according to Marty Mitchell, director of product policy at America’s Health Insurance Plans, Washington.

About 80% of the claimants received payments in 30 days or less, Mitchell noted.

Mitchell asked why a disability claims best practices list is needed.

Steve Clayburn, a senior director and actuary with the American Council of Life Insurers, Washington, said insurers should handle claims “properly and promptly,” but he observed that $7.7 billion in claims are paid annually.

With such a large volume, there will be some claims that do not receive proper treatment, Clayburn said.

But rather than creating an “overly proscriptive list” of best practices, regulators could encourage use of existing remedies, such as the Unfair Claims Settlement Practices Act, the Employee Retirement Income Security Act and market conduct exams, Clayburn said.

A best practices list would create de facto regulation without the de facto regulation going through the NAIC model law process, and it would act as “a template for trial lawyers,” Clayburn warned.