State Regulators Want Insurers to Keep Tabs on Vendors: NAIC Watchers

What You Need to Know

A multi-state group has concerns about oversight of short-term health lead generators.
Regulators also want to see insurers monitoring their TPAs and underwriters.
Some regulators still want to apply suitability rules to life insurance.

Insurance regulators are getting complaints from consumers about calls from firms that generate short-term health insurance leads.

Michael Rohan, a lawyer with Locke Lord LLP, talked about that issue Wednesday, during a webinar on the National Association of Insurance Commissioners’ spring national meeting. The NAIC held the meeting online, from April 7 through April 14.

Rohan said one thing he noticed was Trinidad Navarro, the Delaware insurance commissioner, and Frank Pyle, another Delaware regulator, talking about concerns about short-term health insurance marketers.

“If you have a third party doing any kind of activity for you, whether they’re licensed or unlicensed, you’re ultimately answerable to the regulators for that,” Rohan said.

Some regulators want to review existing NAIC models, and those reviews could eventually lead to new kinds of oversight of lead generators, Rohan said.

Paige Waters, a Locke Lord partner, said regulators also are looking at how insurers monitor third party administrators, managing general underwriters and other types of business associates.

“The insurance regulators are really holding the insurance companies responsible for their third-party vendors,” Waters said.

Suitability

Waters and Rohan also talked about what they’re hearing about “suitability,” or efforts to make sure that insurers and financial professionals are selling products that appear to suit the purchasers’ needs.

Race, Diversity and Inclusion

The NAIC started a Special Committee on Race and Insurance, and that committee wants to deliver a set of recommendations to the NAIC’s executive committee by the end of this year, according to Stephanie O’Neill Macro, another member of Locke Lord’s NAIC team.

Part of the committee’s work involves looking at access to life insurance, annuities and health insurance, Macro said. “There seemed to be a sense of an urgency and a desire to walk the talk and to move past the information-gathering phase.”

Waters said she has seen strong comments coming from regulators about the diversity and inclusion efforts.

Regulators “seemed to be pretty concerned that any comment or response from the industry was the industry pushing back on this,” she said.