Hot Topics: NAIC Looks to the Future

Tim Mullen (NAIC) covers a variety of issues currently on the NAIC’s radar.
Tim Mullen (NAIC) covers a variety of issues currently on the NAIC’s radar.

Commissioner McCarty’s opening comments included his hot topics listing and the perfect segue for Tim Mullen and Jolie Matthews, both from National Association of Insurance Commissioners (NAIC), to develop the hot topics listing for Exchange participants. Following the discussion, Gerard O’Sullivan, consumer affairs manager for the Connecticut Insurance Department, led the entire group for interaction with the panelists—and interaction was robust with regulators and consumer affairs professionals seizing the opportunity to interact with NAIC representatives. What’s the NAIC focus for the future? Take a look:

Affordable Care Act (ACA)
It was no surprise to participants when this discussion started with health topics and the implementation of ACA. Ms. Matthews pointed out that everyone has a role in the partnership deployment of ACA. State insurance regulators are primarily responsible for reviewing multiple aspects of ACA and enforcement and are committed to consumer assistance—states are still the main resource for consumers with complaints. Agents and brokers continued to have a vital role in working with consumers as a significant and primary contact. NAIC is doing its part by updating market conduct information to accommodate the new standards and is working on memos of understanding with federal agencies to assist consumers.

Jolie Matthews (NAIC) discusses the impact of sweeping health care changes to consumers and insurers.
Jolie Matthews (NAIC) discusses the impact of sweeping health care changes to consumers and insurers.

All reform brings challenges—expected and unexpected
Matthews pointed out that, beyond the well-publicized challenges, NAIC identified additional challenges of:

• The amount of resources needed for implementation for all states to be up and running to be compliant with requirements.
• States must get people into the risk pool to ensure insurance products work.
• Keeping small-group markets and U.S. territories engaged and not becoming an adverse market that would deplete the risk pool.

NAIC is working with the disparate groups to make sure regulators are informed and consumers are protected—all determined to keep the consumer from getting discouraged so that the opportunity for insurance is available for all. Specifically what is NAIC doing? It’s taking a multi-faceted approach that includes:

• System upgrades
• White papers on plan management
• Market conduct updates
• Model laws
• Checklists and resources

ACA and market conduct
NAIC is working on multiple topics including: complaint coding, sharing of data, market conduct standards, health survey and data collection, and interstate collaboration. As the ACA story unfolds, NAIC will be proactive in making recommendations on compliance concerns and market analysis standards.

Both panelists concurred that time will tell how the market place will be impacted as ACA continues the march toward full implementation.

Life insurance
Life insurance products can be extremely complex—requiring consumer guardians to be knowledgeable and proactive in protecting the consumer. On the life insurance hot topic list are:

• Individuals are concerned about outliving their resources just as a decline of defined benefit plans is evolving—forcing many consumers to become pension experts. Some companies are developing innovative products—such as contingent deferred annuities. NAIC is concerned that companies may not be reserving appropriately for this product with the untested longevity of clients. NAIC is wary that these products could become a state regulatory concern and is asking:

o Who regulates this hybrid product, and
o Who reviews the solvency and consumer protection standards?

What else is on NAIC’s radar for the future?
Clearly, NAIC sets a gold standard for taking on industry issues—and the group will simply never run out of topics.  Here’s what’s on the radar at this point of time:

Benefits of electronic transactions for insurance industry
Consumers are used to working online with financial products.  For the insurance industry, the ability to deliver environmentally friendly documents at virtual speed is attractive for a variety of aspects of the industry including:  policies, notices, claim communications.  At this point, electronic transactions are not allowed for renewals or cancellations and parties must agree to do business electronically and able to print where necessary.

Because compliance concerns surface with format requirements, proof of delivery and records retention requirements become more important than ever and the NAIC is working to clarify

Tim Mullen and Jolie Matthews (NAIC) respond to attendee questions.
Tim Mullen and Jolie Matthews (NAIC) respond to attendee questions.

those standards.

 Social media white paper
Was adopted in by NAIC in 2011 and it contains specific guidance provisions inserted include insurer responsibility for producers, third-party posters and record-keeping requirements.  Must reading for all insurance professionals

• Telematics
Triggers a variety of concerns including privacy as companies can use real-life activities such as speed, braking, and more.  This will impact the use of traditional analytical tools such as credit score and educational levels (see related story in this edition of Catalyst).

• International Market Conduct activities
This involves reviewing insurance core principles including agents and brokers, conduct of business and point-of-sale disclosures at an international level.

 Seniors with dementia
NAIC is working to get plans in place before this growing trend.

• Annuity buybacks
Triggered by economics conditions including low interest rates, this is another topic of concern in terms of consumer protections.

• Long-term care insurance
Premium issues are at the top of NAIC’s radar as this is a simmering social issue and insurance can be part of the solution.
With such knowledgeable panelists, time simply ran out before the topics did.  Fortunately, many in the group were able to seek out the panelists for one-up, in-depth conversations.

Click here to view Matthew’s presentation

Click here to view Mullen’s presentation

Jolie Matthews
Sr. Health & Life Policy Counsel
444 N. Capitol St, NW, Suite 701
Washington, DC  20001

Tim Mullen
Director, Market Regulation
1100 Walnut, Suite 1500
Kansas City, MO  64106

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