NEW YORK–When insurers undergo market conduct exams, they should not be overly adversarial, but if problems arise with a contract examiner, they should speak up, a regulator and industry professionals counseled at a meeting here.
That was some of the advice that emerged during a panel session Friday titled "Market Conduct Examinations: A View From The Trenches" at the New York City Bar Association's 18th Annual Current Issues in Insurance Regulation seminar.
One topic raised that has long been a sensitive one for insurers was the use of contract examiners.
If there is a problem with a contract examiner, a company should talk to the regulator, said Rosanne Mead, assistant insurance commissioner with the Iowa insurance department. "I have fired contract examiners because they ran up the bill."
She also explained what can be expected when companies adopt a tough posture, keeping time sheets and having a lawyer present every time a staff person is interviewed. "If you take an aggressive stance, that's OK, but it is going to take longer."
"Don't call and say, they are five minutes late today. Maybe they'll be five minutes early one day. That get's old," Ms. Mead advised.
If a company has realized there is a problem and has implemented "a national fix," it should make regulators aware of that effort, Ms. Mead continued.
Reinforcing the scope of the examination is important for a company, according to David Kenepp, an assistant vice president and manager of market conduct services with Liberty Mutual, Boston. Companies should develop a work plan and even a budget, he advised.
A company should conduct the examination in a professional way, he said. In short, Mr. Kenepp added, "treat examiners the way you would want to be treated."
He cautioned that if a company starts off "in a bad position, it is very hard to get back on track." So, Mr. Kenepp advised, firms should respond to requests in a timely manner or give a reason why the company cannot respond in a reasonable time frame.
Kara Baysinger, vice chair of Sonnenschein's insurance practice group in its San Francisco office, concurred that the scope of the examination should be established. "It amazes me how many times this is not done."
She said it does not help to be confrontational at the start of an examination, although she did note that as the exam progresses, a company might have to be more rigorous.
"Sloppy half answers" and a "treasure hunt" for documents that an examiner needs are things that a company should try and avoid, Ms. Baysinger suggested.
The quality of contract examiners is "pretty spotty," she said. Some are fantastic, learning about a company and its products and doing an analysis, but others "have a vendetta against the company or a huge ramp up time," she noted.
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