Regulators Release 2005 Market Analysis Scorecard

January 10, 2006

The National Association of Insurance Commissioners (NAIC) has released its 2005 Market Analysis Scorecard to show transparency and accountability.

The scorecard evaluated states on criteria such as the involvement of the state’s Market Analysis Chief and Collaborative Action Designee; a completion of at least a minimum number of Level 1 Analysis reviews; certification of full participation in three key MIS databases; and documentation that complaint and regulatory action data is being submitted to the NAIC electronically.

“We are continuing to see improved communication, collaboration and commitment to market regulation reforms,” said Susan Voss, Chair of the Market Analysis (D) Working Group (MAWG). “Many market analysis successes have been documented with the public release of the 2005 Market Analyst’s Scorecard.”

A key area of the scorecard is the number of Level 1 Analysis reviews completed. This checklist provides a uniform method through which states review complaint activity, regulatory actions, changes in premium volume and other key market indicators. With the automation of Level 1 Analysis questions in the Market Analysis Review System (MARS), over 1,750 Level 1 Analysis reviews were completed by 48 jurisdictions. MARS is designed to document that a minimum, uniform level of review was performed on select insurance companies, as well as to document a market analyst’s input, conclusions, and recommendations. The analysis can be completed using information currently available to a state without contacting a company. In addition, the findings are available through MARS to other states’ market analysts.

In addition, MAWG supervised the development of the Level 2 Analysis Guide which provides market analysts with detailed recommendations concerning additional places to obtain crucial information on insurers, both from within and outside the insurance industry.

The Uniformity (D) Working Group has worked hard during 2005 to develop core competencies, which are standards a state’s market regulation division should follow to ensure adequate supervision of the marketplace. There are four categories of competencies addressed in the initial document. They include Resources (regulatory authority, staff), Market Analysis (data collection, data analysis), the Continuum of Regulatory Responses (desk audits, interrogatories, investigations, examinations) and Interstate Collaboration. The Uniformity Working Group expects to continue the development of additional standards in 2006. Dennis Shoop, Chair of the Uniformity (D) Working Group stated, “The development of the core competencies will provide even more proof that states are committed to market regulatory reforms.”

Collaboration among states will continue to increase with the adoption of the Collaborative Actions Guide, which establishes procedures to communicate and coordinate market conduct actions with other states through Collaborative Actions Designees (CADs) and MAWG. By implementing market analysis techniques and sharing pertinent information with MAWG, states can identify those regulated entities where there is a shared concern regarding the regulated entities’ market practices.

“Over the last few months, we have several examples of states successfully working with each other on examinations and other types of regulatory interventions,” added Voss.

Finally, the NAIC is utilizing a continuum of regulatory actions that describes steps that can be taken before an exam is called. In the spring of 2006, all states will have the ability to enter the market regulatory actions they are taking into the Market Initiative Tracking System (MITS). This will allow all states to know what actions other states are taking, thereby eliminating duplicate requests and conflicts when possible and increasing collaborative efforts.

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