State regulators across the country may soon have a definitive source of guidance on market analysis, as the National Association of Insurance Commissioners’ (NAIC) Market Analysis & Consumer Affairs (D) Committee this week adopted a Market Analysis Handbook at the association’s Winter National Meeting in Anaheim. The handbook is slated to be adopted by the full NAIC membership sometime in early 2004.
The Market Analysis Handbook, according to regulators, can be a key resource in understanding and utilizing data to help identify financial problems or market conduct issues within insurance companies. It focuses on helping state regulators to use three primary sources of data to target potential market problems: 1) consumer complaint data, 2) relevant financial data and 3) market share information.
Primary benefits of the handbook include:
· It brings new rigor to the process of compiling and analyzing data to target regulatory resources on the most important consumer problems;
· It then allows states to collaborate more effectively through the use of common data; and
· It allows the entire process to occur earlier and more rapidly, providing for earlier intervention when necessary and, ultimately, better resolution.
“This has been a comprehensive process that the Market Analysis Working Group started last year, and we are gratified to see it move forward toward full adoption,” said Joel Ario, Oregon Insurance Administrator and NAIC secretary-treasurer, who serves as chair of the Market Analysis & Consumer Affairs Committee. “The handbook provides states with uniform market analysis standards and procedures, which include the integration of market analysis with other regulatory functions. Our goal is to have all states implement the core checklist contained in the handbook.”
The stated purpose of the Market Analysis Handbook, Ario added, is to identify data and information that is already available to regulators and catalog specific ways that the data can be used. This data and information, if used correctly, can assist states in identifying predictors of potential problems, assist states in using their resources better, and assist states in developing a more detailed understanding of the marketplace.
“Adoption of the Market Analysis Handbook is one of the key steps identified under the market regulation section of the NAIC’s regulatory modernization action plan, so this marks another step forward in our broader goals as well,” Ario said.
Once it is adopted by the full NAIC membership, the handbook will be published and made available to all state insurance departments.
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