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NAIC systems serve regulators and companies with data, standardization
and cost savings
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Trish Schoettger, senior manager
for business initiatives, NAIC, shares how her organization
utilizes the data insurers provide to the NAIC. |
The National Association of Insurance Commissioners (NAIC) was
formed in 1871, the same year as the Great Chicago Fire. And while
we aren’t sure how many complaints the nascent organization
may have received in the wake of that rather substantial property
loss, we can say that the NAIC has been performing a variety of
crucial industry oversight functions for almost 135 years.
“The NAIC is also a voluntary organization,” said
Trish Schoettger, senior manager, Business Initiatives, NAIC. “Its
primary mission is to coordinate with multi-state insurers on a
variety of issues to protect and ensure insurers’ ability
to provide safety and security to their customers.”
A broad range of industry interests
The various databases designed and maintained by the NAIC are
aligned with the main objectives and goals of the various state
insurance departments that make up the organization's membership.
Functions support the licensing of agents, the approval of products,
solvency regulation, government affairs and other roles of importance
to state insurance regulators.
During the 1980s, the NAIC came together to make significant improvements
in the regulation and oversight of insurer financial strength following
a number of insurer insolvencies, especially in the life insurance
field. Among other things, the initiative had four specific goals
in mind:
- To simplify compliance for insurance companies
- To modernize various regulatory functions so that regulators
could accept information from insurers more quickly and cost
effectively.
- To reduce the often burdensome cost of compliance for insurance
carriers.
- To provide regulators with easy access to timely information.
World's largest insurance database
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“NAIC’s Financial
Data Reporting (FDR) system constitutes the world’s
largest insurance database,” says Schoettger. |
"Looking back on the project, it was a true success story
for the NAIC and regulators," Schoettger said. "We were
able to come up with one set of standards and a modernization program
that now has more than 5,000 companies filing financial data with
the NAIC on a quarterly basis over the Internet at reduced costs."
As one of the NAIC’s keystone systems, the Financial Data
Reporting (FDR) system, employs a uniform standard and process
for collection of financial data. The system can collect more than
57,000 data elements from every company over the Internet, cross
check it and enter the information into the database within 24
hours.
The NAIC also operates a Producer Licensing Database available
to the various state departments in a fashion similar to the FDR
system.
"If an agent in Minot, N.D., wants to sit in pajamas at midnight
and apply for non-resident licenses in several states, he or she
can do it using one uniform standard application agreed upon by
all states through the NAIC. The agent can fill out the form once,
submit it electronically and have it reviewed by every applicable
state."
The NAIC'S consumer complaint database of all closed cases is
a national repository that allows states to data mine information
to identify whether complaints are growing over time for particular
types of claims or for specific companies. Also available is a
regulatory action database that stores information about adjudicated
and closed cases against agents and companies. The information
is useful in telling one state whether an agent applying for a
non-resident license, for example, has ever faced action in another
state.
Given that the NAIC maintains massive databases of potentially
sensitive information, security is a top priority.
"The NAIC maintains confidentiality agreements with every
state," Schoettger said. "All information is used for
regulatory purposes only. In addition, the NAIC has made significant
investments in its security infrastructure. We have implemented
a wide range of best practices, firewalls, design reviews and other
actions to make sure that all data is protected."
CONTACT INFO
Trish Schoettger
National Association of Insurance Commissioners
816.783.8506
Email: tschoett@naic.org
www.naic.org
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