TEST: Recent NAIC News Releases

STATES WORK TO PROTECT CONSUMERS AGAINST CREDIT SCORING

NAIC Members Testify Before Congress on States’ Regulatory Responses

WASHINGTON, D.C. (Oct. 3, 2007) — Two members of the National Association of Insurance Commissioners (NAIC) testified before the U.S. Congress to share how their states have addressed the use of credit reports in insurance underwriting.

Washington Insurance Commissioner Mike Kreidler and Hawaii Insurance Commissioner J.P. Schmidt testified yesterday before the Subcommittee on Oversight and Investigations of the House Financial Services Committee.

Kreidler spotlighted Washington’s law, enacted in 2002, which prohibits insurance companies from using credit history to cancel or non-renew a personal insurance policy. The law also bans the use of certain attributes of credit history to deny coverage or set premiums.

“As of today, 48 states have joined Washington state and have enacted some level of regulation over this practice,” said Kreidler, who also chairs the NAIC’s Market Regulation and Consumers Affairs (D) Committee. “It is our responsibility as regulators to ensure that credit scoring does not unfairly discriminate and harm protected classes of people.”

Kreidler recommended additional actions that could be taken to protect consumers and protected classes from being harmed by the use of credit scoring: (1) Restore “adverse action” notices; (2) Make “adverse action” notices more meaningful; and (3) Require insurers to prove their models do not unfairly discriminate.

Schmidt’s testimony focused on the impact that Hawaii’s ban on the use of credit bureau rating in the pricing of premiums has had on its automobile insurance market. Hawaii has prohibited the practice since 1987.

“Twenty years of experience has provided no evidence that Hawaii’s statutory exclusion related to the use of credit bureau ratings in the pricing or underwriting of insurance has diminished the efficacy of the Hawaii insurance market,” Schmidt said. “While it has been actuarially demonstrated that there is a correlation between an individual’s credit score and the propensity for that individual to be involved in future claim activity, that relationship provides only a portion of the information needed to develop and to regulate an insurance rate regulatory system.”

Click HERE for the full text of Kreidler’s testimony.
Click HERE for the full text of Schmidt’s testimony.

 

NAIC PRESIDENT DEFENDS
‘DYNAMIC, ROBUST’ REGULATION
Implores House Subcommittee to ‘Modernize, Don’t Federalize’
KANSAS CITY, Mo. (Oct. 3, 2007) — National Association of Insurance Commissioners (NAIC) President and Alabama Insurance Commissioner Walter Bell testified today as to the strength and stability of state-based insurance regulation.
“Every day, state insurance departments make certain that insurers meet the reasonable expectations of American consumers with respect to financial safety and fair treatment,” Bell told members of the U.S. House Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises. “In addition to successfully protecting consumers, state insurance officials have proven adept stewards of a vibrant, competitive insurance marketplace.”
Specifically, Bell outlined a number of major areas where state insurance regulators have implemented initiatives that have successfully strengthened state insurance regulatory processes, including:
• Speed to market;
• Solvency and guaranty funds;
• Consumer assistance and education;
• Fraud detection;
• Regulatory actions against companies, agents and brokers;
• Turnaround on rate and form filings;
• Producer licensing; and
• Company licensing.
“We have been the face of regulatory reform, coupling an aggressive enforcement mindset with advanced techniques to provide comfort to American consumers in times of peril,” he said. “However, there are limited areas where insurance regulation could benefit from a federal presence.”
For example, state insurance regulators have often requested access to FBI databases in order to conduct background checks on potential insurance agents and brokers. In addition, state insurance regulators have encouraged the enactment of federal legislation such as the Terrorist Risk Insurance Act (TRIA), which provides a federal insurance backstop in the event of a terrorist attack.
“The NAIC and its members welcome Congressional interest in insurance supervision,” Bell said. “But even well intended and seemingly benign federal legislation can have a substantial adverse impact on existing state protections for insurance consumers. Modernize, don’t federalize.”
Click HERE to view the full text of Bell’s testimony.
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NAIC MODERNIZING REINSURANCE REGULATION
Proposes Mutual Recognition,
“Functional Equivalence” of Non-U.S. Reinsurance Regulation
WASHINGTON, D.C. (Sept. 30, 2007) — The National Association of Insurance Commissioners (NAIC) is drafting a proposal to comprehensively modernize reinsurance regulation in the United States.
The proposal — developed by a subgroup of the NAIC’s Reinsurance Task Force — calls for amending the existing regulatory framework to allow for single-state licensing of U.S. reinsurers, and encourages the NAIC to develop a Reinsurance Supervision Review Department (RSRD).
“As state insurance regulators look at enhancements to reinsurance regulation in the United States,” said NAIC President and Alabama Insurance Commissioner Walter Bell, “we are encouraged by supervisory developments in non-U.S. jurisdictions where robust regulation of reinsurance has recently been introduced.”
In the European Union, for example, member states are in the process of implementing a new reinsurance directive. The NAIC’s reinsurance proposal could ultimately provide a framework for mutual recognition between the U.S. and non-U.S. jurisdictions.
The RSRD would assist in the evaluation of the extent to which non-U.S. jurisdictions apply regulatory oversight that is “functionally equivalent” to U.S. regulation. Under the proposal, non-U.S. reinsurers domiciled in “functionally equivalent” jurisdictions would be allowed to access the entire U.S. market through a single port of entry state.
“U.S. regulators believe that a reinsurance regulatory framework also must be sufficiently flexible to accommodate the rapidly changing reinsurance environment, while providing for appropriate levels of financial stability, solvency and predictability that are critical to a vigorous market, consumer protection and a strong and secure insurance regulatory system,” Bell added.
The Task Force will discuss this propsal further during a meeting Nov. 7-8, 2007, held in conjunction with the NAIC Financial Summit in Atlanta. For more information, visit www.naic.org/committees_e_reinsurance.htm.

 

NEW ADDRESS CHANGE TOOL OVERWHELMING SUCCESS
NIPR’s ACR Cuts Processing Time, Supports Uniformity
WASHINGTON, D.C.  (Sept. 29, 2007) — The National Insurance Producer Registry’s (NIPR) newest online innovation, the automated Address Change Request (ACR) is an overwhelming success. In less than three months, the ACR has received more than 80,000 transactions and is now available in 42 states.
The speed and ease with which producers can now process address changes has earned the recognition of regulators and producers alike.
“This enhancement has saved — and will continue to save — time, money and resources for the insurance industry and state licensing divisions,” said New Hampshire Insurance Commissioner Roger Sevigny, who serves on the NIPR board of directors. “The phone calls are less, the faxes are less and the stacks of paper change requests waiting to be tediously processed, are less.”
“The ACR is going to eliminate at least 50 percent to 60 percent of the resource drain created by the paper submissions by improving the speed and accuracy of the transition,” said Dan Corridon, director of licensing administration for GEICO Licensing. “The corresponding savings to the industry will be many millions of dollars.”
“The ACR is an important piece of the producer licensing puzzle and a pioneering development in support of the National Association of Insurance Commissioners’ uniformity iniatives,” said NIPR Executive Director Maryellen Waggoner. “We are pleased by the overwhelming support and know that the use of the ACR will continue to grow.”
Producers and authorized users can view the complete list of participating states, and submit individual producer address changes through the NIPR Web site, www.NIPR.com. NIPR plans to have all 50 states and the District of Columbia accessible by the end of the year.

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FIVE STATES JOIN EFFORT TO COLLECT MARKET CONDUCT DATA
Centralized Collection Will Increase Efficiency, Effectiveness of Program
WASHINGTON, D.C. (Sept. 29, 2007) — The National Association of Insurance Commissioners announced today that five states will begin requiring companies to file Market Conduct Annual Statement (MCAS) data.
Alabama, California, Montana, Rhode Island and Washington will join a growing list of states that require companies writing at least $50,000 of premium in their state for private passenger automobile, homeowners, life or annuity premium to file MCAS data.
“Good market data is required for good market analysis,” said Washington Insurance Commissioner Mike Kreidler, who chairs the Market Regulation and Consumer Affairs (D) Committee. “I am pleased to see states join Washington in this important market regulation project — and I encourage all states to adopt the NAIC Market Conduct Surveillance Model Law to facilitate the modernization of market regulation.”
With the addition of the five new states, the total number of states collecting state-specific data will reach 30 for the 2008 calendar year. The data will be due to the participating states by April 30, 2009, for property/casualty data and June 30, 2009, for life and annuity data.
Five states started the MCAS pilot project in 2000 to meet their need for uniform market-related data. One of the states, Ohio, agreed to provide the initial programming and support resources for the pilot project. In 2004, the NAIC membership voted to make the MCAS a permanent project.
“The Ohio Department of Insurance has provided an outstanding service to insurance regulators and companies by supporting the development of the MCAS project,” Kreidler said. “Because of the growing number of states participating in the program, an important next step is having our data-collection efforts centralized at the NAIC to increase the program’s efficiency and effectiveness.”
Participating states request MCAS information via a call letter sent to each company. The call letters for the 2008 data year will be sent during November 2007. Every company required to participate in the MCAS project must provide a contact person responsible for the overall project. Companies must submit the required contact information on the Market Conduct Annual Statement Insurance Company Contact Form, located on the NAIC’s Web site at www.naic.org/committees_d_mcas.htm.
Participating states include: Alabama, Arizona, California, Colorado, District of Columbia, Florida, Idaho, Illinois, Indiana, Iowa, Louisiana, Kansas, Kentucky, Maryland, Missouri, Montana, Nebraska, New Hampshire, New Jersey, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Virginia, Washington, West Virginia and Wisconsin.

STATE INSURANCE REGULATORS PROTECT
MILITARY PERSONNEL FROM PREDATORY
LIFE INSURANCE SALES
Rapid Adoption of Model Regulation Demonstrates Dedication
to More Than 1 Million Service Members Nationwide
WASHINGTON, D.C. (Sept. 28, 2007) — The National Association of Insurance Commissioners (NAIC) today released a report to the U.S. Congress that details action taken by state insurance regulators to protect American military personnel and their families from predatory life insurance sales.
The centerpiece of the states’ efforts is the implementation of the NAIC Military Sales Practices Model Regulation. Already adopted in 15 states, the model regulation now provides safeguards for a half-million of the nation’s active-duty service members.
“Our goal is to protect those who protect us, by helping ensure they are offered only first-rate financial products,” said Georgia Insurance Commissioner John Oxendine, co-chair of the NAIC’s Military Life Insurance Working Group. “That we’ve been able to take action so quickly — in coordination with state legislatures, Congress and the Department of Defense — is a true testament to the effectiveness of state insurance regulation.”
It is anticipated that all 50 states, the District of Columbia and Puerto Rico will adopt the model regulation by the middle of next year. At that point, the more than 1 million members of the U.S. Armed Forces, and their families, will be covered by the special protections that the NAIC model regulation provides.
“This demonstrates the states’ ability to enact reform that will protect our military personnel,” said Texas Insurance Commissioner Mike Geeslin, who also co-chairs the Military Sales Working Group. “There are many state insurance department staff, military personnel and state legislators that helped us get to this point. To them, we’re all grateful.”
In addition to the model regulation, the NAIC has developed the Military Sales Online Reporting System (MSORS). A Web-based application, MSORS provides state and federal officials and insurers with one place to report disciplinary actions taken against those soliciting life insurance sales on any U.S. military installation.
The Military Sales Working Group was appointed in December 2006 to direct NAIC activities relative to applicable directives set forth in the federal Military Personnel Financial Services Protection Act. The NAIC report submitted today to the U.S. Congress fulfills a requirement under that act.
Click HERE for the cover letter.
Click HERE for full text of the report.
INSURANCE COMPACT COMMISSION RELEASES FIRST ANNUAL REPORT
Inaugural Year of Operation Exemplifies ‘States, Strength & Speed Aligned’
WASHINGTON, D.C. (Sept. 27, 2007) — The Interstate Insurance Product Regulation Commission (IIPRC) today announced the release of its first annual report. Following a theme of “States, Strength & Speed Aligned,” the annual report outlines the goals and accomplishments of the IIPRC’s inaugural year of operation, as well as the results of its first audit report.
“Given that 2006 was the start-up year for the IIPRC, this annual report reflects the initiation of our operations and our first audit report,” said IIPRC Executive Director Frances Arricale. “With 30 member jurisdictions to date, reflecting half of the premium volume nationwide, the IIPRC continues to make progress in serving as the central point of electronic regulatory filing under uniform standards for asset-protection insurance products.”
At its initial meeting in June 2006, the IIPRC formed an interim Management Committee, published bylaws, and initiated a plan of action developed by the National Association of Insurance Commissioners’ (NAIC) Interstate Compact Implementation Task Force. Since that time, the IIPRC established an organizational framework, hired key staff, adopted its first uniform standards and approved its first product filings.
“I look forward to meeting future challenges with the continued support of our members as we work toward the modernization goal of streamlined filing and efficiency, while continuing to hold the strong bar on consumer protection,” said IIPRC Chair and West Virginia Insurance Commissioner Jane L. Cline.
The IIPRC will meet at 9 a.m. Friday, Sept. 28, 2007, at the Marriott Wardman Park Hotel during the NAIC’s Fall National Meeting in Washington, D.C. The annual formation of the IIPRC Management Committee and the election of officers, in addition to other agenda items, will occur during the three-hour meeting. For more information, visit www.insurancecompact.org.
For an electronic version of the IIPRC 2006 Annual Report, click HERE.

FOR IMMEDIATE RELEASE FROM NAIC AND IAIS
INTERNATIONAL INSURANCE REGULATORS
TO MEET IN FLORIDA FOR ANNUAL CONFERENCE
Keynote Speakers and Panels to Address ‘A Global Climate
for Change: The Future of Insurance Regulation’
KANSAS CITY, Mo. (Sept. 19, 2007) — The National Association of Insurance Commissioners (NAIC) will welcome nearly 600 attendees from more than 130 countries to the 14th annual meeting of the International Association of Insurance Supervisors (IAIS) Oct. 16-19, 2007, in Fort Lauderdale, Fla.
“The theme of this year’s conference — A Global Climate for Change: The Future of Insurance Regulation — could not be more appropriate, given all of the issues that insurance supervisors face,” said IAIS Executive Committee Chair Michel Flamée. ” Globalization, economic uncertainty, climate change, and financial innovation, to name a few, all reinforce the need for supervisors to work together to develop consistent standards and reach out to emerging markets.”
The annual conference includes panel discussions on topical insurance issues, such as: promoting sound insurance markets; international accounting standards; emerging economies; reinsurance; globalization; principles-based supervision; cross-sectoral risk transfer and securitization; and aging society/microinsurance. In addition, the IAIS will present its new education project for insurance supervisors.
“Globalization of the world’s economy is not only changing the way businesses operate, but it is also changing the way we regulate,” said NAIC President and Alabama Insurance Commissioner Walter Bell, who also serves as vice chair of the IAIS Executive Committee. “The NAIC is committed to working with the IAIS on international standard-setting and initiatives, as well as to helping raise the level of insurance expertise and ensure the stability of financial markets worldwide.”
Keynote speakers include:
• Fariborz Ghadar, Ph.D.
Dr. Ghadar is the William A. Schreyer Chair of Global Management and Director of the Center for Global Business Studies at Penn State. He is a leading authority on future business trends, global economic assessment and international finance and banking. Dr. Ghadar is scheduled to speak at 10:10 a.m. Monday, Oct. 17.
• Evan Mills, Ph.D.
Dr. Mills is a scientist at Lawrence Berkeley National Laboratory. He is a leading expert on the economics of insurance and climate change. Dr. Mills is scheduled to speak at 1 p.m. Thursday, Oct. 18.
On-Site Press Briefing
There will be an on-site press briefing at 3 p.m. Thursday, Oct. 18. The following NAIC and IAIS members will participate:
• Michel Flamée — IAIS Executive Committee Chair and Vice-Chair, Banking, Finance and Insurance Commission (Belgium);
• Walter Bell — NAIC President, Alabama Insurance Commissioner and IAIS Executive Committee Vice Chair;
• Alfred Gross— Virginia Insurance Commissioner and IAIS Technical Committee Chair;
• Manuel Aguilera-Verduzco — IAIS Implementation Committee Chair and President, Insurance and Surety National Commission (Mexico); and
• Yoshihiro Kawai — IAIS Secretary General.
For more information or to register for the 2007 IAIS Annual Conference, visit www.2007iais.org.