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Exchange Keynote Panel: Department of Insurance Forum
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Doug Ommen (director, Missouri Department of Insurance, Financial Institutions & Professional Regulation) and Peg Ising (deputy director - Regulatory Compliance & Consumer Protection) provide their insight into insurance consumer relations. |
ICAE provided an ideal forum for directors of departments of insurance to share their thoughts on consumers, uniformity and market conduct. For the insurance consumer affairs professionals in attendance, it was the opportunity of a lifetime. Joining moderator Tim Mullen, director of market regulation for the NAIC, were Peg Ising, deputy director of the Ohio Department of Insurance and Doug Ommen, director of the Missouri Department of Insurance.
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OH DOI deputy director Peg Ising states that health care remains at the top of her list of issues impacting consumers and insurers. |
What keeps you awake at night?
Panelists started at a brisk pace with the question, “What issues keep you up at night?” And, things never let up…here’s the high-level overview:
Similar to many people, Deputy Director Ising revealed that her best ideas were generated in the shower. Her biggest concerns center on:
- Health insurance reform and affordable health care for the citizens of Ohio,
- Issues involving seniors, including predatory practices targeting seniors;
- Communications issues with seniors, and
- Staffing disaster centers so that consumers in need are helped.
Director Ommen finds issues surface when he goes for walks. He’s been known to wrestle with issues such as:
- Professionalism within the industry and how to overcome the unfortunate image of the insurance industry. His general impression is that most agents are well-trained and try to meet consumer needs, yet a negative impression still lingers.
- Controversy surrounding the issue of how insurance is paid. Clearly any coverage paid for by the government is merely a transfer of cost to the state. Fundamentally and economically, how do we handle that transfer and the costs associated with the transfer?
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Tim Mullen, NAIC director of market regulation, moderates the DOI forum. |
Tapping into expertise
Adeptly monitored by Tim Mullen, the audience offered up additional industry concerns, including:
- Issues around bankers, or other non-insurance industry producers, involved in the sale of insurance products who are beyond the power of DOI regulation. Develop an industry standard for consumer protection.
It was noted that companies are responsible for the sales practices of their agents, whether or not DOI regulation comes into play. Director Ommen specifically urged companies to train agents. He felt that professionalism and free-market practices would ultimately be more powerful than government regulation. He pointed out that problems aren’t really with the majority of companies and that placing layers of requirements on companies would not solve the issue of unscrupulous producers.
To address the issue of less-than-perfect producer activities, Director Ommen suggests solutions it at two levels:
- Educate DOI staff in terms of regulatory oversight and arm regulators with enough knowledge to help them determine appropriateness of products, as well as fraud, and
- Standardized suitability requirements for more complicated products.
These solutions were endorsed and echoed by Deputy Ising as she noted that Ohio is creating training programs to enhance literacy.
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MO DOI director Doug Ommen mentions that the perception of an overall non-professional image of the insurance industry remains a concern for insurers. |
The exchange of information continued
Thrilled with the wealth of expertise provided by the panel, there was no shortage of inquiries from the audience.
Panelists were given the opportunity to opine on:
- The Federal flood insurance program from the state regulator point of view
The consensus was that there were issues, but states could and should work with Federal agencies before, during and after a flood so the consumer knows what product is being purchased, from whom and what recourse can be considered when issues arise.
- The general issue of the use of credit scoring for auto insurance
Although it was recognized that the use of credit scores on predicting loss is valid, it remained troublesome that a disparity exists for minorities. Yet, in the interest of free-market enterprise, the use of credit also helps companies open up additional markets.
Director Ommen held that, “This is an important debate because of disparate impact. Credit scoring should be open for public policy debate. The insurance industry seems to be inviting criticism because main street doesn’t understand the correlation between credit scores and risk. I believe in letting the market operate, but this practice brings insurance companies under a cloud, making it harder to operate in the marketplace.”
Deputy Ising stated that the consumer should know when the credit score comes into play. Actuaries find credit scores to be a valid system. Therefore, if used, consumers should be told what is being weighed and judged. Simply put, more information and education would help consumers make better decisions.
Moderator Mullen pointed out that the NAIC has a consumer brochure on credit, as does the AIA.
- Can the NAIC help with details that vary from state-to-state in market conduct exams?
Companies present articulated an industry-wide concern regarding the expense of market conduct exams. Interestingly, association and regulator representatives recognized the negative impact of inconsistent market conduct exams.
All agreed that state-based regulation has benefits; because states are closer to the community they serve. However, the lack of uniformity drives significant costs. The NAIC is taking a proactive position on this, looking at both the analysis phase as well as the exam stage.
Many state regulators are collaborating with domestic states to establish a consistent, top-down approach to market conduct exams--a distinct departure from the “technical gotcha” regulatory mindset. This change in attitude and culture from all stakeholders is anticipated to be more beneficial to consumers.
Finding what’s best for consumers
The discussion generated by the Department of Insurance Forum demonstrated that the insurance industry stakeholders represented at ICAE are motivated to keep consumers informed and protected. The issue remains on how stakeholders can integrate information from exams and analysis for the good of the consumer.
Quick hits for all stakeholders included:
- Ensure data accuracy,
- Make data available,
- Facilitate the NAIC’s efforts in uniformity of complaint codes, and
- Access the tools available.
All stakeholders were urged to remember that the NAIC is open to talking to companies about burdensome regulations. In addition, tools are available to provide regulators with the opportunity to have an open dialogue with companies about what’s happening and why. Regulators urged companies to remember that where there is a disconnect between companies and the consumers, it’s in everyone’s best interest to reconnect BEFORE it becomes a problem.
The regulator’s consensus was that they, too, were concerned that companies were maneuvered into spending limited resources on exams rather than providing proactive outreach to the consumer.
United in a spirit of doing what’s right for the consumer, the panel disbanded. |
