A National Association of Insurance Commissioners proposal to centralize and organize the collection of data on insurers' and agents' market conduct moved another step forward yesterday.
The proposal was adopted in a nearly unanimous conference call vote by the Kansas City, Mo.-based organization's Market Regulation and Consumer Affairs D Committee.
It will now advance to the NAIC's executive committee and, if adopted, go to the organization's full plenary for final affirmation.
The move to pull in market conduct data has drawn strong opposition from the insurance industry. In addition to expressing concern over using the financial filing to draw in nonfinancial information, insurers also are concerned about the confidentiality of data that would be included in these reports.
Regulators and consumer advocates, on the other hand, say the information will permit them to better assess a company and lead to better regulatory oversight in the market.
The vote saw 11 states supporting the proposal, one abstaining and one opposed.
John Morrison, Montana commissioner and 'D' committee chair, outlined the proposal, detailing how it creates a new structure that would:
o Collect current market conduct data through a supplement to the annual financial statement.
o Make reporting of market conduct data due May 1 rather than March 1 along with the annual financial statement filing requirement.
o Make the NAIC the central repository for the data.
o Not allow the NAIC to proactively sell such data unless it receives the support from its membership.
o Continue work to refine data elements.
o Not foreclose adding additional data elements in the future.
Commissioners participating in the discussion offered overwhelming support for the proposal. The discussion did not include interested parties because it was maintained that there had been extensive opportunity both in person and by letter to raise concerns. Seventy-eight persons were on the line to hear the conference call.
In the view of NAIC President and Kansas Insurance Commissioner Sandy Praeger, the annual statement is the most efficient way to collect data creating uniformity and offering companies a single filing instead of multiple state filing requirements.
It makes "perfect sense" to file one form rather than with 29 states on separate forms, according to Jane Cline, NAIC vice president and West Virginia commissioner. "It is important not to back pedal but to move forward," she said.
Joel Ario, Pennsylvania acting insurance commissioner, said that since Ohio is no longer the lead state on the issue, coordinating efforts, a system needs to be put in place expeditiously so that there will not be any backward movement on the current work.
When market conduct data was first collected as a pilot project, Ohio agreed to coordinate those efforts and has continued to do so until recently when it informed other states that it would end its role.
If there is backward movement, Mr. Ario cautioned, opponents of state regulation in Washington will use that backward movement to question the job that state regulators are performing.
On the issue of confidentiality, Mr. Ario said he and other regulators would be open to hearing about concerns, but that those concerns should be specific and not be broad-based concerns about confidentiality.
Data that is collected is 15 months old and therefore not likely to raise issues of competitive disadvantage since it is not real-time data, he noted. Mr. Ario is a former 'D' committee chair who oversaw initial work on the issue several years ago.
Kim Holland, Oklahoma insurance commissioner, suggested that identifying data clearly would ameliorate insurers' concerns that data may be taken and misinterpreted.
State insurance regulators obtain market conduct data with examinations that look at insurers' and producers' business practices, monitoring marketing, advertising, policyholder services, underwriting, rating and claims practices. The exam reports will list any alleged violations of law and summarize any actions taken to correct the alleged noncompliant practices.
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