Market Regulation and Consumer Affairs (D) Committee

Market Regulation and Consumer Affairs (D) Committee
March 31, 2008

The Market Regulation and Consumer Affairs (D) Committee met on Monday, March 31, 2008.

During this meeting, the Committee:

Discussed a proposal for the centralized collection of the Market Conduct Annual Statement (MCAS) data elements. The pilot project began in 2002 with the Ohio Department of Insurance agreeing to provide the technical support for the project. At that time, an Ohio staff person created the Microsoft Access Database, through which the information is reported and used by all states. The goal of the project is to provide a uniform system of collecting market related information to serve the needs of participating states. As the project has grown, and the number of participating states increased, the Ohio Department has requested that the NAIC provide the support. The current proposal is to collect the data elements in the NAIC statutory annual statement. Traditionally, the data has been collected using each state’s examination authority. This allows for the data to be maintained as confidential, even though the data itself has never been determined to be confidential by regulators or NAIC staff.

Received the Report of the Antifraud (D) Task Force. The Chair of the Working Group stated the Producer, Company, Unauthorized Entities and Unlawful Activity Working Group had met and discussed the need for a future conference call to discuss the Working Group’s charges and discussed possible initiation of an NAIC based “Alert” system to better inform fraud bureaus regarding current unauthorized entity information. The Federal and International Enforcement Coordination Working Group had met and discussed progress towards access to the FBI Fingerprint Database for criminal investigation. The working group had approved a recommendation to National Conference of State Legislatures (NCSL) to reauthorize “Insurance Fraud: Federal Criminalization” and “Equal Access to FBI Criminal History Records” Policy Statements. The Antifraud Liaison Working Group had discussed the Special Investigative Unit (SIU) Guidelines and Anti-Fraud Plan Model initiative. The Antifraud Training and Seminar Working Group had met and discussed plans for the NAIC Fraud Investigation Seminar. The Information Sharing and Technology Working Group had discussed progress of the Online Fraud Reporting System (OFRS) enhancements and the progress made towards linking the NICB Suspicious Claims System to the OFRS. Finally, the NAIC/NASAA Enforcement Coordination Working Group had discussed the transition from NASAA to FINRA for Joint Training Seminar to be held before the NAIC Fall National Meeting.

Received the Report of the Producer Licensing Working Group. The Chair of the Working Group reported that at the request of the Executive Committee, the group will also review of issues discovered during the Producer Licensing Assessments. These issues include (1) uniform licensing standards that should be considered professional licensing standards; (2) compliance with uniform licensing standards and identification of those standards that are not generally supported by the local industry organizations at the state legislative level; (3) compliance with the uniform licensing standards to identify those standards where more specific interpretive guidance is warranted or revisions to the standards are necessary; (4) disparate business entity licensing laws, (5) and full adoption, and uniform interpretation, of the commercial lines multi-state exemption and the commission sharing exemption across all states.

Received the Report of the Market Regulation Handbook Working Group. The Vice Chair of the Working Group stated the group will work in collaboration with the Market Analysis Priorities (D) Working Group to expand the Market Regulation Handbook to include the market regulation initiatives and market analysis techniques set forth in the NAIC Framework for Market Analysis. The working group will also develop new core competency standards to include criteria which measure state compliance with the market regulation initiatives and market analysis techniques outlined in the Framework for Market Analysis, and develop other core competency standards that support market regulatory function, as deemed necessary by the Working Group.

Received the Report of the Market Analysis Priorities Working Group. The Chair of the Working Group stated their 2008 tasks include (1) reviewing the market analysis portions of the Market Regulation Handbook and submitting recommendations to update areas where information is no longer current or correct; (2) reviewing the statutory annual statement and submitting recommended data elements that would enhance the market analysis process; (3) reviewing and submitting recommended changes to the Market Conduct Annual Statement’s (MCAS) definitions;

and (4) reviewing and approving recommendations regarding the market analysis tools once approved by the Market Analysis Research Development Focus Group (MARD).

Received the Report of the Market Analysis Working Group. The Chair of the Working Group stated the working group’s charges were still being created, but one of the tasks would be for the working group to review the adopted working group procedures regarding referrals of companies to the group and evaluation what, if anything, needed to be revised.

Received the Report of the Consumer Protections and Innovations Working Group. The Chair of the Working Group stated the tasks for the year would include working on the privacy model disclosure form, reviewing the need for transparencies of consumer disclosures, and reviewing best practices regarding innovations developed by regulators that have not been a result of legislative requirements.

Discussed the Federal Credit Scoring Proposal. Consumer groups are concerned that the legislation will give a federal agency jurisdiction over what should be considered unfair discrimination. The Committee reviewed the options the Committee might take to review the use of credit scores in the underwriting and rating of insurance.

Action Items:

1. Formally appointed the working groups for 2008.

2. Adopted the suggested changes to the Unauthorized Entities Manual.