Market Surveillance - Oregon Insurance Division

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  • Companies with fewer problems will hear from us less but will want to keep in touch with the analyst.
  • Companies with fewer problems will hear from us less but will want to keep in touch with the analyst.


  • 1. Department of Consumer and Business Services
  • 2. Market Surveillance
  • 3. Market Analysis
    • 6 Analysts
    • Market Analysis Coordinator
  • 4. Market Analysis Goals
    • Integrate Market Regulation functions
    • Increases communication between front end and back end regulation
    • Provide better customer service
  • 5. Role of Market Analysis
    • Monitor insurance companies compliance with laws.
    • Identify practices that negatively impact consumers.
    • Focus resources on insurers with potential market conduct problems.
  • 6. Role of Market Analysis
      • Investigates allegations of violations of the Oregon Insurance Code.
      • Perform market conduct target exams.
      • Develop policy recommendations for legislative changes.
      • Provide broad surveillance of the insurance marketplace.
      • Take other actions necessary to protect the insurance-buying public.
  • 7. Tools of Market Analysis
    • Company interviews
    • Targeted surveys
    • Policy & procedure reviews
    • Interrogatories
  • 8. Tools of Market Analysis
    • Desk audits
    • Self audits
    • Data calls
    • Surveys on emerging issues
    • Targeted Market Conduct Exams
  • 9. Impact on Insurers
    • Increased communication
    • Companies assigned to a specific analyst
    • Less on-site examinations for companies in compliance
    • Rapid response
  • 10. Communication
  • 11. Why Communicate?
    • Identify general market disruptions and important market conduct problems as early as possible to eliminate, or at least to limit, the harm to consumers.
    • Prioritize and coordinate the various market regulation functions of the department and establish an integrated system of proportional responses to market problems.
  • 12. Why Communicate?
    • Provide a framework for collaboration among the other states and federal regulators regarding identification of market conduct issues and market regulation.
    • Complaint activity, legal issues, financial concerns, or irregularities in rate and form filings often accompany market problems.
    • Market problems may be an early warning sign of other problems with a company, so it is essential for information to be shared and discussed between the Market Analysis Coordinator and other Department staff.
  • 13. Interdivisional Communication
    • A system of collection and analysis of data and other information that enables a regulator to do the following:
      • Identify general market disruptions
      • Prioritize and coordinate with various market regulation functions
      • Collaborate among States
  • 14. Interdivisional Communication
    • Interdivisional communication is used to monitor issues:
        • Complaint activity
        • Legal issues
        • Financial concerns
        • Irregularities in rate and form filings
  • 15. Interdivisional Communication
    • Department staff reports any of these indicators to Market Analysis:
    • Significant changes in the ratio of consumer complaints against an insurer or significant numbers of complaints in a relatively short period of time.
    • Dramatic growth (> +33%) or decline (< -10%) in one or more lines of business.
    • Significant changes in the company’s book of business.
    • Rapid expansion into new states and significant premium volume in new states.
  • 16. Interdivisional Communication
    • Significant concentrations of risk geographically, by line of business, or exposure or significant changes in the concentrations of risk.
    • Significant changes in expense levels (such as defense costs or commissions).
    • Recent change in the state of domicile of a major writer in an insurer group.
  • 17. Interdivisional Communication
    • Recent changes in ownership or senior management.
    • A high degree of reliance on third parties to perform company functions, such as Managing General Agents or Third Party Administrators.
    • Significant problems with electronic data processing systems such that the integrity of data underlying claims, underwriting and financial systems is questionable.
  • 18. Baseline Analysis
    • Lines of insurance to be analyzed:
      • Private Passenger Automobile
      • Homeowners
      • Individual Life and Annuities
      • Individual Accident and Health
      • Group Accident and Health
      • Group Life and Annuities
      • Credit Insurance
      • Long Term Care
      • Medicare Supplement
  • 19. Baseline Analysis
    • Baseline analysis includes multiple categories including:
        • Complaint Index
        • Premium
        • Market Share
        • Loss Ratio
        • Direct Losses Paid
        • Direct Losses Unpaid (Reserves)
        • Defense Costs
        • IRIS ratios
        • RIRS actions
  • 20. Market Analysis
    • When the analysis of the data is completed, a score is given to each company ranking them 1 to 10 per category.
    • Once a ranking is given for each, scores are totaled and the company with the highest score may warrant further examination.
  • 21. Continuum of Regulatory Response
    • Proportional response to market problems
    • Compliance vs. regulatory action
    • Addresses problems on a broader basis
  • 22. Response to Market Conduct Problems
    • Education
    • Proactive outreach
    • Examination
      • Target
      • Collaborative
    • Corrective Action Plans
    • Restitution
    • Enforcement Actions
    • Changes in law
  • 23. Follow up
    • Goal: Follow up with companies as early as possible to make sure concerns are adequately addressed before small problems become large problems.
  • 24. Market Analysis on a broader basis
    • Through rule making, legislative changes, and NAIC model laws.
    • Examples-
      • Law has not kept pace with changing conditions.
      • The practice is technically legal but harmful to consumers.
      • Marketplace disruptions
  • 25. Collaborative Approach
    • Internal-within the division
    • External-with other states and other agencies
  • 26. Internal Collaboration
    • Rates and forms
    • Consumer Advocacy
    • Investigations
    • Financial
  • 27. External Collaborations
    • NAIC
      • Market Analysis Working Group (MAWG)
      • Market Conduct Annual Statements
      • Data Calls with other states
      • Accepting other states examinations
      • Market Analysis Checklist
      • Company profiles from other states
  • 28. Enforcement Approach
    • Primary goal
      • Change the behavior that is harmful to consumers
      • Deterrent
  • 29. Other enforcement approaches
    • Restitution where applicable
    • Corrective action plans
    • Fines
  • 30. Success without Enforcement
    • Case Example:
    • Women's examination claims incorrectly adjudicated
    • The Company made restitution to Oregonians - $10,415
  • 31. Success without Enforcement
    • Case Example:
    • Maternity claims denied based on an imposition of a 12-month waiting period.
    • The Company reprocessed 136 claims.
  • 32. Success without Enforcement
    • Case Example:
    • The Company incorrectly adjudicated emergency claims as non-emergency.
    • Market Analysis requested the company audit ER Claims. As a result 63 of 85 claims that were incorrectly adjudicated were reconsidered as ER Claims.
  • 33. Producer Investigations
    • 3 Investigators
    • Chief Investigator
  • 34. Producer Investigations
    • Source of Referrals:
        • Consumer Advocates
        • Consumers
        • Insurance Producers
        • Insurers
        • Other State Agencies
  • 35. Factors Considered in Opening Case Files
    • Violation of Insurance Code
    • Violation of Administrative Rule
    • Harm to Consumer
    • Seriousness of Violation
    • Age of Violation
  • 36. Types of Producer Investigations
    • Misappropriation of Premium
    • Misrepresentation
    • Trust Account Violations
    • Fraud
    • Forgery
    • Life Insurance Replacement
    • Failure to Respond
  • 37. Possible Actions
    • Letter of Warning
    • Referral to Enforcement Unit for Administrative Action
    • Referral for Criminal Prosecution
  • 38. Questions?