Survey Totals Data Call Expense

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By Jim Connolly, NU Life-Health Senior Editor

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NU Online News Service, Aug. 28, 2:25p.m. EST?Property-casualty insurers said cost informationfrom a just-completed survey underscores the need to limitregulators' data collection demands for market conductexaminations.

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The National Association of Insurance Commissioners, KansasCity, Mo., is currently working on a project to streamline themarket conduct examination process as part of a broader effort tostreamline state insurance regulation. One element of that effortis a project to collect company data and see how it could helptarget examinations.

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The survey of 63 companies was conducted in early August. Of thefirms that responded, 50 responded to cost questions. Their answerssuggest that data gathering could cost property-casualty companiesapproximately $16 million, according to Don Cleasby, assistantgeneral counsel with the National Association of IndependentInsurers, Des Plaines, Ill., one of four property-casualty tradegroups weighing in jointly on the issue.

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The other groups include the American Insurance Association,Washington; the Alliance of American Insurers, Downers Grove, Ill.;and the National Association of Mutual Insurance Companies,Indianapolis.

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Mr. Cleasby said the results culled by the four trade groupswere presented to regulators during an interim meeting in Chicagoon Aug. 22-23. As a result, he said, regulators agreed to make thedata time period prospective, from January 1-June 30, 2003, ratherthan from July 1, 2001-June 30, 2002.

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The decision is important, according to Mr. Cleasby, because"the stretch on the IT staff would be very difficult forcompanies."

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Survey findings underscored this problem. Respondents were askedif companies that are part of a group use the same data systems.Only 30 of 50 companies answered that they were part of the samedata system. Mr. Cleasby said that the companies that are not partof the same system have slightly or conceivably very different datasystems, complicating data call efforts.

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Several questions addressed the issue of whether companiesretrieved information electronically, manually or through bothmeans.

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For example, a question on claims information available foundthat 68.4 percent would retrieve information electronically, but31.6 percent used a combination of electronic and manualmethods.

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Although claims information will not be in the data call, thesurvey includes information on claims.

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Asked what kind of claims information firms have available, 57of 63 companies said data is recorded on the date a claim is madeor opened; 38 on the date of a claims settlement; 54 on the date adraft or check was issued; and 55 on the date a claim file wasclosed.

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When asked if companies track information on the number ofclaims closed without payment and the number of claims deniedwithin certain time periods, companies responded as follows: 19tracked the information in a zero to 30 day period; 19 within 31-60days; 18 within 60-90 days; 18 within 91-180 days; 18 within181-365 days; 17 in over 365 days; and 34 tracked none of the aboveor do not have claims aging data.

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When asked about sorting information by lines of coverage, 27could sort information by bodily injury, 26 by property damage, 25by collision, 25 by comprehensive, 26 by uninsured/underinsuredmotorist, and 24 by personal injury protection.

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A total of 38 of 63 companies had information readily availableby number of auto cancellations during the first 59 days after theeffective date; 37, the number of cancellations 60 days or moreafter the effective date; 40 had information on the number of autonon-renewals; 52 on the number of autos insured; and 54 on thenumber of auto policies in force.

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The same question was asked of homeowners insurance, with thesame respective categories resulting in the following number ofcompanies: 30, 28, 35, 43 and 50 out of a total of 63respondents.

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Mr. Cleasby said the survey results are instructive because theypoint out the need to make sure that the benefits of the dataoutweigh the costs. Those costs, he said, are just for theproperty-casualty insurers and do not take into account the coststhat state insurance departments would face in analyzing thedata.

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More discussion is needed on the value of that information andwhether it will be used to target examinations, said Laura Kersey,counsel with the AIA.

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Removing the retrospective requirement will reduce costs, sheadded.

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Ms. Kersey said it is a good thing that individual states willbe collecting data rather than having it collected in a centralplace that could open up access to what companies considerconfidential information.

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However, she expressed concern that if data is gathered thatstates actually make use of it.

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