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Center Questions Actuary Data Access Proposal

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The Center for Economic Justice is objecting to the idea of a life valuation manual section automatically giving actuarial organizations a special level of access to experience data.

The Austin, Texas, center, raises questions about actuarial organization data access in a comment letter submitted to the Life Actuarial Task Force at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo.

The task force is helping the NAIC develop VM-50, a section of a life valuation manual that will deal with insurance claims experience reporting.

Insurers, regulators and consumer groups have debated the rules that should govern just how much access members of the public and others should have to experience data.

The current “exposure draft” of VM-50 states that professional actuarial groups such as the Society of Actuaries, Schaumburg, Ill., and the American Academy of Actuaries, Washington, have often played a role in developing experience studies and will continue to do so.

The draft would give the professional actuarial organizations access both to company-level combined data and to “sanitized” individual policy records when the organizations are creating reports requested by the NAIC.

Creating a special role for professional actuarial organizations “is highly inappropriate for several reasons,” the center says. “Professional actuarial organizations cannot have special access to data because they are private organizations and not government entities.”

If regulators want actuarial organizations or other private parties to have special access to data, then they should hire consultants and use contracts that spell out requirements for confidentiality, conflicts of interest and antitrust issues, the center says.

Otherwise, actuaries who are working for a specific insurance company with an interest in the data could face potential conflict-of-interest concerns, and actuaries who do business with a number of insurers

might face antitrust problems, the center says.

“The explanation that actuaries leave their employment at the door when they perform work for an actuarial organization is not credible,” the center says. “That assurance simply does not eliminate or even mitigate the potential conflict of interest or antitrust problems.”

Instead of creating a special role for professional actuarial organization, the NAIC could simply authorize regulators to hire consultants or contractors with requirements for strict confidentiality agreements and conflict-of-interest provisions, the center says.

“Then, regulators could contract with consulting firms or actuarial organizations which have the skills to provide the required services and can comply with confidentiality, conflict-of-interest and antitrust requirements,” the center says.

In a discussion of a VM-50 section experience data access, the center says there should be just two categories of information – public and non-public.

“Non-public, or confidential, information includes transaction level data with personally identifiable information,” the center says. “Public information includes any aggregate data compilations with no personally identifiable information. Information between these two ends of the spectrum includes transaction data with personally identifiable information and/or company identification removed and aggregations with company identifiers.”

If information is public, “then any member of the public has the right to obtain the information,” the center says. “If non-public, then no member of the public has the right to obtain the information.”

Regulators should not delegate control over which information is released to the public to private organizations, center says.

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