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Roundtable discussions: Diverse views discussed
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Liz Perry (Anthem Blue Cross Blue Shield – Virginia), ICAE president, opened the session by welcoming all and challenging the group to be innovative thinkers to solve the complex issues facing consumer affairs professionals. |
Let’s face it; virtually no insurance consumer affairs professional sees things exactly the same way. That’s why, when consumer affairs professionals get together to discuss standardization…well, things get interesting. The ICAE Roundtable, hosted by Nationwide and held April 16, 2007 in Columbus, was no exception.
The group approach
More than 40 insurance professionals and regulators came to the Roundtable ready to tackle significant issues, offer expertise, and discuss, discuss, discuss. Due to the myriad issues facing those gathered, the professionals split into small groups to ensure each participant had the opportunity to propose issues, seek counsel and advice on best practices and offer insights.
After small group discussion on pressing issues and best practices to address or resolve those issues, each group presented the two most complex consumer-affairs scenarios discussed at their tables, offered current resolutions and requested group input.
No-holds-barred discussion points
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Mary Jo Hudson, Director, Ohio Department of Insurance welcomed the group to Columbus. |
From boutique to global, the consumer-affairs issues discussed helped generate real-life best practices solutions to address the situations presented. Regulators and company representatives got involved in the spirited discussions. Here’s the overview:
Scenario I: Inappropriate match of product to client/lack of consumer understanding of product
This proved to be a scenario of common interest across product lines and categories. All agreed that incidences of inappropriate sales were an issue—more often a result of inexperience and omissions than an intent to defraud consumers. Regardless of how a disconnect occurs, the consensus was that no stakeholder group (company, industry, regulators or consumer) emerges as a winner when this happens. Best practices discussed ranged from proactive checks and balances to innovative, collaborative thinking—all aimed at enhancing the consumer experience and industry reputation. Suggestions included:
- Better producer/agent review
- A “suitability hotline” where agents can consult product experts and gather more information during the sales process
- A consumer hotline, staffed by Department of Insurance (DOI) product experts
- Side-by-side comparisons of product specifications for clients
- More and better product training and target-audience-by-product information for agents,
- A review of commission structures to eliminate the temptation to sell unsuitable products due to commissions
- Internal corporate reviews matching products sold with specific client follow-ups
- Better education for agents and consumers
- More corporate oversight; include specific programs to reach out to consumers via letters and surveys during the free-look period to ensure understanding of product and disclosures
- Better, more exact, criteria for determining financial profile
- Insurance literacy programs for youths, detailing responsibilities for consumers, companies and regulators
- Plain language standards for disclosure statements.
Scenario II: “One strike, you’re out” practice for workers’ compensation programs
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Jack Chaskey, Supervising Insurance Examiner, New York Department of Insurance, reported on the NAIC Complaint Handling and Reporting Standards project triggered in 2006 by the ICAE position paper generated by membership during the 2005 Roundtable and subsequent Exchange. |
Under examination, this proved to be a boutique issue, but one with potentially significant, and adverse, impact to a state’s economy. If workers’ compensation programs are not affordable, yet required, it may be impossible for small and start-up businesses, generally considered to be the backbone of the economy, to survive. Although most were not involved with this issue, attendees acknowledged that group wisdom can be effective and offered several suggestions:
- A group-rating program overhaul to ensure economic feasibility in keeping companies with minimal claims in the program
- Create a “one-claim discount program” that identifies those with claims, but keeps the premium costs affordable
- Safety training, proactive risk management and education programs for small employers to control the claims issues
Scenario III: Suspected fraud: Consumer affairs nightmare
This scenario proved that truth is stranger than fiction. The participating regulators offered comments to corporate representatives on how best to handle the persistent consumer who claims to be the beneficiary of a policy, but doesn’t have the slightest shred of proof about the policy ever existing (the actual details were significantly more interesting, you’ll have to trust us…).
Because insurance fraud is everyone’s concern, regulators urged corporate representatives to contact their state regulator immediately with any suspected fraud complaints. Regulators expressed a strong desire to work with companies sooner rather than later when fraud might be involved. Many regulators indicated that with a bona-fide head’s up, the complaint would not be counted as a complaint until the issue of fraud was resolved.
Scenario IV: Unauthorized third-party inquiry
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As facilitator of the Columbus Roundtable, Marty Fisher (Martha Fisher & Associates) energized attendees to provide insight on important issues. |
The issue of unauthorized third parties requesting information on insurance policies also crossed product line boundaries. Insurance companies want to do what’s right for clients, but also are bound by privacy laws. Best practices agreed upon included:
- Standard letters to the client/member requesting release to a third-party, outlining the information requested and who requested it, and
- Comprehensive programs designed to educate clients, members, and the general public on the importance of authorization
Scenario V: Company-wide standardization for systematically collecting complaints
Perhaps only consumer affairs professionals could view the positive aspects of complaints! Important individually, with proper collection and collation, complaints can be mined for valuable information with a wide variety of applications from market analysis and product development to training and distribution systems.
To make information statistically valid and highlight trends to put the information to good use, the complaint data must be processed consistently—and there’s the rub.
Companies and regulators alike acknowledged consistent processing of complaints as an issue. Because complaint processing typically involves many individuals or groups (such as call centers, information technology staff, managers, complaint resolution staff, chief compliance officers, internal audit staff, corporate staff and, of course, regulators), complaints can be coded and processed in a highly subjective manner, eliminating any hope for consistent processing of information.
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Bob Lisson, Deputy Commissioner, North Carolina Department of Insurance, reviewed progress to date on the NAIC Complaint Code Review project. |
Attendees agreed the NAIC code-busters were creating a good start with the code consolidation project currently underway. Implementing best practices at the corporate level would bring clarity and refinement to complaint data, helping companies distill knowledge that leads to corrective action—ultimately helping the consumers. Proposed best practices included:
- A guidance manual for all internal stakeholders to use. The manual would lead to consistency, the potential elimination of ongoing extra reviews and (gasp!) actionable information
- Ongoing analysis and trending, after reconciliation between field and centralized units
- A centralized database for complaint information with specialized training for specialists
- Cascade communication of best practices from the highest possible level to ensure compliance and eliminate silos and protectionist mentality
- Constant communication with regulators and the NAIC to narrow codes with the goal of more simplicity and efficiency
Sidebar:
Headed west: the four issues that need to roam
Not all topics were fully discussed at the Roundtable. Four standardization-oriented topics generated such robust discussion that they’ll be continued at the San Diego Exchange this fall, with the outcome being a unified endorsement.
So what are the topics that could improve the customer experience, enhance corporate accountability and (perhaps) eliminate repetitious, unprofitable and unproductive activities that drain insurance professionals’ most valuable commodity, time? They are:
- Propose “prudent person” procedures for transmission of confidential information
- Generate recommendations on records retention and a “statute of limitations” with preliminary minimum actions so corporations and DOIs could officially determine when a complaint is closed
- Establish review recommendations and processes to ensure suitability (a more detailed review of Scenario I)
- Propose specific standards for responses to complaints and how to count a single complaint sent to multiple recipients (originally received by the consumer, then by the DOI, then by the attorney general, etc.)
Where to go from there?
To continue ICAE’s tradition of positively positioning change, we need you—your thoughts, your input, your ideas, your best practices.
The four standardization issues listed above will be fully vetted for input, review and endorsement. From there, ICAE leadership and members will determine next steps and an action plan to ensure ICAE members continue to affect positive change in the insurance industry.
Join us in San Diego for the rest of the story…
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