Transcript Seminar NAIC/ASSAL/SVS

Market Conduct
Examination Standards
© 2014 National Association of Insurance Commissioners
INTRODUCTION





Cornerstone of Market Regulation
Started in the 1980s
Formalized prior to Market Analysis
Require the most resources
Are the most intrusive
2
KEY MARKET REGULATION ROLES
 Chief Examiner (Regulator)
 Examiner in Charge (Regulator or Contractor)
 Company Coordinator (Company)
3
CASE STUDY
4
5
THE DECISION TO CONDUCT AN EXAMINATION
 Advantages



In-depth knowledge of the company
Ability to communicate face to face
Ability to access information without a filter
 Disadvantages




Use of Regulator Resources
Use of Company Resources
Much higher cost than other continuum options
Opportunity Costs
6
THE CHIEF EXAMINER’S TASKS
 Notify the Company with a “Call Letter”
 Select the Examiner In Charge (EIC)
 Provide Information to EIC
7
THE EXAMINER IN CHARGE’S TASKS
 Contact the Company to inquire about the
Company Coordinator
 Provide Coordinator’s Handbook


Expectations of the Coordinator
Logistical requirements of the exam
 Request initial items from Company
 Enter information in the NAIC’s Examination
Tracking System (ETS)
 Prepare the Exam Team
8
9
INITIAL TASKS AT THE COMPANY
 Conduct Opening Meeting




Examination Overview
Importance of coordinator’s role
How to handle Formal Requests
How to handle Criticisms
 Finalize Examination Plan and Tracking Method
 Validate Information Received
 Conduct Sampling of files
10
CONTINUOUS TASKS DURING EXAM




Submit Formal Requests
Submit Criticisms
Ensure proper documentation
Send status updates to the Chief Examiner
11
CONDUCT AREAS OF REVIEW







Company Operations and Management
Complaint Handling
Marketing and Sales
Underwriting and Rating
Policyholder Service
Claims
Producer Licensing
12
COMPANY OPERATIONS/MANAGEMENT
 Purpose

To provide examiners an overview of the
Company and how it conducts its business in
the marketplace.
 Techniques

Review a variety of corporate documents,
reports, procedures and processes.
 Tests and Standards
13
MARKETING AND SALES
 Purpose

To evaluate the representations made by the
Company to market its products and services to
potential consumers and producers.
 Techniques

Review market and sales materials and producer
training items.
 Tests and Standards
14
UNDERWRITING AND RATING
 Purpose

To evaluate how a Company performs its
Underwriting and Rating practices.
 Techniques

Review underwriting and rating manuals,
processes and a sample of new and renewal
policies.
 Tests and Standards
15
POLICYHOLDER SERVICE
 Purpose

To evaluate how a Company responds to the
requests of its policyholders regarding premium
notices, premium refunds or questions.
 Techniques

Review processes and a sample of files.
 Tests and Standards
16
CLAIMS
 Purpose

To provide an overview of how the Company treats
claimants with the acknowledgment, investigation
and settlement of claims.
 Techniques

Review claim manuals, processes and a sample
of claims, both paid and closed without payment.
 Tests and Standards
17
COMPLAINT HANDLING
 Purpose

To ensure the Company has proper consumer
complaint handling procedures and follows
them accordingly.
 Techniques

Review company procedures, complaint register
and a sample of consumer complaints.
 Tests and Standards
18
PRODUCER LICENSING
 Purpose

To provide an overview of the Company’s
practices regarding the appointment and
termination of its producers.
 Techniques

Review company manuals, processes and a
sample of producer files.
 Tests and Standards
19
WRITTEN EXAMINATION REPORT





Summary of Examination Findings
Executive Summary
Basic Information about the Company
Basic Information about the Examination
All Examiner’s Findings
20
FINAL TASKS AT THE COMPANY
 Conduct Exit Conference


Overview of all findings
Explain next steps in process
 Send Information to Chief Examiner
21
QUESTIONS/COMMENTS
22