Survey Totals Data Call Expense

By Jim Connolly, NU Life-Health Senior Editor

NU Online News Service, Aug. 28, 2:25 p.m. EST?Property-casualty insurers said cost information from a just-completed survey underscores the need to limit regulators' data collection demands for market conduct examinations.

The National Association of Insurance Commissioners, Kansas City, Mo., is currently working on a project to streamline the market conduct examination process as part of a broader effort to streamline state insurance regulation. One element of that effort is a project to collect company data and see how it could help target examinations.

The survey of 63 companies was conducted in early August. Of the firms that responded, 50 responded to cost questions. Their answers suggest that data gathering could cost property-casualty companies approximately $16 million, according to Don Cleasby, assistant general counsel with the National Association of Independent Insurers, Des Plaines, Ill., one of four property-casualty trade groups weighing in jointly on the issue.

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.

Mr. Cleasby said the results culled by the four trade groups were presented to regulators during an interim meeting in Chicago on Aug. 22-23. As a result, he said, regulators agreed to make the data time period prospective, from January 1-June 30, 2003, rather than from July 1, 2001-June 30, 2002.

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

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

Several questions addressed the issue of whether companies retrieved information electronically, manually or through both means.

For example, a question on claims information available found that 68.4 percent would retrieve information electronically, but 31.6 percent used a combination of electronic and manual methods.

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

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

When asked if companies track information on the number of claims closed without payment and the number of claims denied within certain time periods, companies responded as follows: 19 tracked the information in a zero to 30 day period; 19 within 31-60 days; 18 within 60-90 days; 18 within 91-180 days; 18 within 181-365 days; 17 in over 365 days; and 34 tracked none of the above or do not have claims aging data.

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

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

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

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

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

Removing the retrospective requirement will reduce costs, she added.

Ms. Kersey said it is a good thing that individual states will be collecting data rather than having it collected in a central place that could open up access to what companies consider confidential information.

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

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Survey Totals Data Call Expense

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