NAII Cautions Commissioners on Market Conduct Annual Statement

A push by the National Association of Insurance Commissioners (NAIC) to establish a market conduct annual statement pilot program for insurers raises critical concerns in the areas of cost and confidentiality, according to one insurance trade group.

The National Association of Independent Insurers (NAII) cautioned the NAIC Market Analysis Working Group at their national meeting this week that their efforts to test the market conduct annual statement proposal through a pilot program involving 12 states could mean significant additional expenses for insurers as well as raising other concerns.

“The NAIC’s efforts to test the market conduct annual statement concept may create substantial expenses because of the volume of additional data requested for this annual statement within such a large pilot program that includes12 states,” NAII Assistant General Counsel Don Cleasby said. “In addition, NAII has concerns that not all of the states in the pilot program will have the resources necessary to do the type of analysis needed of the information provided by the insurers. Adding to those concerns, the NAIC’s goal is to complete this expansive program with a comprehensive report by year’s end (2002) could clearly be too short a timeframe to allow for adequate data collection and analysis.”

Another critical concern is the confidentiality of the information from companies. It is essential that all of the states participating in the pilot project have adequate confidentiality laws to protect proprietary information collected from insurers as part of the pilot, according to the NAII.

The NAII also noted that this same NAIC Working Group is developing another product on how regulators can best use the data they already receive to analyze what is happening in their markets. The regulators were encouraged to utilize fully existing information currently available before embarking on a new probably costly data collection effort.