The National Association of Insurance Commissioners says it is encouraged by the survey results indicating state insurance regulators have made progress in instituting market regulation reforms.
State departments of insurance and industry trade organizations recently conducted separate surveys as a way to collect information on the changes in type, cost and duration of market conduct activities from 2003 to 2005.
Data from the surveys indicate states have decreased the use, length and cost of market examinations while increasing actions along the continuum of regulatory options.
The state survey found that examinations with company-paid expenses of over $100,000 fell dramatically, by 67 percent, from 2003 to 2005, and the number of examinations lasting longer than one month has decreased by 33 percent. Industry surveys found similar results.
Also, state regulators are more often using a wider range of regulatory options, such as interrogatories and inquiries, which generally require less time and resources for companies, the surveys indicated.
“The fact that the number of examinations has decreased, combined with exams becoming more targeted and less costly and lengthy, shows that states are utilizing a broader continuum of regulatory options in an effective and collaborative fashion. The initial efforts have increased the effectiveness and efficiency of the state regulatory system,” said Susan Voss, chair of the Market Regulation and Consumer Affairs (D) Committee.
The survey of state regulators also indicated the following results:
The number of on-site, single state-targeted examinations fell 30 percent from 2003 to 2005.
The total number of all examinations dropped 18 percent (393 down to 321) from 2003 to 2005.
The average length of time regulators spent on-site for examinations has fallen in recent years. In 2003, regulators were on-site for more than a month 273 times, while this number fell to 182 in 2005.
Examinations with no company-paid expenses rose by 38 percent from 2003 to 2005, while exams with over $200,000 in expenses fell by 93 percent in the same time frame.
The surveys were conducted through a joint effort of regulators and industry members. The goal of the surveys is to measure progress and provide transparency as part of the NAIC’s commitment to reform in market regulation.
“While the survey has shown success, state regulators will continue to push forward with the continued implementation of market regulatory reforms in the areas of market analysis, uniformity and collaboration,” Voss said.
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