September 29, 2008                                                         Contact:Lucas Hamilton


      The National Association of Insurance Commissioners last week approved a proposal backed by State Auditor John Morrison to increase oversight of how insurance companies treat their customers. The Market Conduct Annual Statement concept will require Insurers nationwide to annually disclose the number of claims denied and delayed the number of cancellations and non-renewals, and the number complaints, among other "data elements."
      "This really represents a seismic shift in insurance regulation," Morrison said. "Historically, insurance regulation has focused on financial solvency; we are raising oversight of market behavior to the same level."
      Morrison chairs the NAIC's Market Regulation and Consumer Affairs committee that developed the proposal and recommended its passage earlier this year. Morrison has also been the primary proponent of the proposal, which has drawn sharp opposition from lobbyists for insurance companies and their trade associations.
      "America's insurance commissioners acted almost unanimously to approve these significant steps forward in the coordinated regulation of market conduct," said NAIC President Sandy Praeger (R-Kansas). "John Morrison has successfully steered this important project through some rough political waters."
      The market conduct proposal was adopted by the nation's commissioners in two parts. In 2009, data that has been collected by a number of individual states will be deposited with the NAIC for aggregation and to set up an IT system to manage national and state specific market conduct information. In 2010, all insurers doing business in the United States will file with the NAIC the market conduct information for every state in which they do business. The NAIC will aggregate and analyze the information, looking for deviant market conduct. The information will be provided to the states and will be used for multi-state actions against offending companies.
      The commissioners left aside, for now, the issue of whether members the public will have direct access to the data. Morrison has advocated that all the data be public.
      Morrison is also pushing this year for adoption of a market conduct accreditation program for state insurance departments, which he sees as a companion to the annual statement initiative. States have long been required to meet various benchmarks for financial solvency oversight in order to achieve and retain "accreditation" status with the NAIC. The market conduct accreditation program would implement similar requirements for state supervision of insurers conduct toward consumers in the marketplace.
      "Together, these initiatives will elevate oversight of marketplace behavior and allow states to work together to ensure that companies treat American consumers fairly," Morrison said.