Last month the National Association of Insurance Commissioners (“NAIC”) adopted a proposal to develop a uniform system for collecting the market conduct information of insurance companies. Market-conduct information includes, for example, how often a company cancels policies, delays claim payments or is in litigation.
The proposal, previously discussed here, calls for the submission of a Market Conduct Annual Statement (“MCAS”) by insurers to the NAIC. The data from the statements would be stored and aggregated in a database maintained by the NAIC. This aggregated information could then be used for enhanced analysis during multi-state examinations.
According to the proposal, calendar year 2009 will be a transition period, as regulators work to find the best possible way to collect the data. In the short-term, the proposal calls for the collection of the MCAS data from the 29 currently participating states. In the long-term, by 2010, this market data will be collected from insurance companies in all jurisdictions for every state in which they do business.
However, the key issue remaining unresolved is whether the collected market information should be available to the public. According to media sources, industry opponents claim that the raw data on market conduct are confidential by law in most states and may contain a company's trade secrets.
Advocates of the proposal, such as Chairman of the NAIC Market Regulation and Consumer Affairs (D) Committee, Montana State Auditor John Morrison, believe that this represents a shift in insurance regulation from focusing mainly on financial solvency to also focusing on market behavior on the same level.
For more information regarding the MCAS, please click here.