ORLANDO, FLA.– Expressing concern that the annual filings willbecome a catchall, insurers are resisting a plan by the nation'sinsurance regulators to have market conduct reports become a partof carriers' annual statements.

A decision is expected by April 15, according to a discussionhere during the spring meeting of the National Association ofInsurance Commissioners.

The conversation took place during the NAIC's Market Regulationand Consumer Affairs 'D' Committee. If the item is adopted, itwould then go to the NAIC's executive committee forconsideration.

In addition to expressing concern over using the financialfiling to draw in other nonfinancial information, insurers also areraising concern about the confidentiality of data that would beincluded in these reports.

Regulators and consumer advocates, on the other hand, say theinformation will permit them to better assess a company and lead tobetter regulatory oversight in the market.

The market conduct annual statement was initiated in 2002 andbecame permanent two years later. Recently, Ohio, which had beenspearheading the market conduct data effort since its inception,notified the NAIC that it would not continue to do so. The NAIC isconsidering both adding the information to the annual financialstatement as well as conceivably creating a central repository forthis data.

The discussion followed a March 27 letter from six insurancetrade groups: America's Health Insurance Plans, the AmericanCouncil of Life Insurers, the American Insurance Association, allin Washington; Blue Cross and Blue Shield Association, Chicago; theNational Association of Mutual Insurance Companies, Indianapolis;and the Property Casualty Insurers Association of America, DesPlaines, Ill.

The letter cites multiple concerns including:

o The appropriateness of including market conduct data in anannual statement form designed for solvency regulation data.

o Timing differences in submission of the Annual Statement andMarket Conduct Annual Statement data.

o Loss of the current confidential treatment of MCAS data.

o A potential mandate that all states require market conductdata reporting as part of the Annual Statement Blank, even thoughmany states have, thus far, not elected to require MCASsubmission.

o Lack of relevant and timely information on proposals underconsideration.

The letter goes on to say that annual statements are by andlarge public documents, and if the information on market conduct isincluded, that information would also be considered public.

On the issue of confidentiality, a discussion by NAIC counselduring the session suggested there are two elements that need to beconsidered in determining whether information is confidential: thestate in which the data is collected, and whether the data iscollected through a market conduct exam or through the annualstatement.

The discussion indicated that if it was collected through theannual statement, it would not be confidential unless there werespecial circumstances.

But regulators and Birny Birnbaum, an NAIC-funded consumer andexecutive director with the Center for Economic Justice, Austin,Texas, questioned the blanket concern of insurers overconfidentiality. “Data is the foundation of everything we want todo to improve market regulation,” he said.

The idea of wanting to send data to individual states ratherthan to one central place doesn't make sense, he said. It is moreeffective to collect data in one place. Nineteen current dataelements are a good start, but more needs to be done to ensure“rigorous analysis,” he added.

And, he noted, collection should be put out for competitivebidding by statistical agents. Mr. Birnbaum also said that “unlessthere is a trade secret, it disturbs the market conduct process togive blanket confidentiality to these data elements.”

Responding to industry comments that there was not enough timeto understand the impact on confidentiality of placing these dataelements in an annual statement, Montana Insurance CommissionerJohn Morrison, chair of the “D” committee, noted that industry hashad five years to review these data elements.

Kim Holland, Oklahoma insurance commissioner, noted that of 14property-casualty data elements, all but four are available onstate insurance department Web sites.

“So, I'm very confused about confidentiality,” she said ofindustry concern. She added, however, that in matters that reallyrequire confidentiality, “we're respectful of confidentiality andknow how critical it is.”

“To aggregate empirical data should be of the utmost importanceto this organization and should be to your members, so that onlyqualified companies are recognized.”

But Rey Becker, vice president-commercial lines, with the PCI,expressed concern that centralizing data with the NAIC is an issuethat is turning up in various NAIC projects.

Indeed, separately, a central repository is being discussed forprojects including actuarial filings under a proposedprinciples-based reserving system that is being developed for lifeand health insurance products.

And, separately, the Senior Issues Task Force is reviewing datareceived from 23 long-term care insurance companies that respondedto a joint LTC data call by the Task Force and the Market Analysis“D” working group. A total of 59 data points were completed bythese companies.

The Senior Issues Task Force conducted the data call becausethere was a belief that it was important to find out exactly whatis going on in the market, said Sean Dilweg, Wisconsin insurancecommissioner. From a policy side, it is important to look at issuessuch as the commonality of LTC terminology and exploring the optionof external reviews, he explained.

When asked if the results of such data could be held in acentral place, Mr. Dilweg said there is going to be a discussion onthe data project over the coming year to look at issues associatedwith the data call.