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.
  • Market Surveillance - Oregon Insurance Division

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

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