Market Conduct Panel

Chuck Vanasdalan (NH DOI), Christine Palmieri (Travelers), Pam Ewing (Wolters Kluwer) & Gerard O’Sullivan (CT DOI).
Chuck Vanasdalan (NH DOI), Christine Palmieri (Travelers), Pam Ewing (Wolters Kluwer) & Gerard O’Sullivan (CT DOI).

No topic is of more interest to consumer affairs professionals than the market conduct exam. Insurers recognize the importance of the exam, yet it can be disruptive and intrusive and, sometimes, portray a company inaccurately or incompletely. Providing insights as to what regulators are thinking and looking for helps consumer affairs professionals go beyond compliance and get into the spirit of the consumer protection provided by regulators.

Panelists Pam Ewing, Wolters Kluwer; Christine Palmieri, Travelers; Gerard O’Sullivan, Connecticut Department of Insurance; and Chuck Vanasdalan, New Hampshire Department of Insurance provided in-insights on interactions between regulators and insurers to enhance future interactions.

How complaints are used
Simply put, complaints are most often processed by crunching the numbers. A recent study showed in actions against P&C companies, consumer complaints were a factor in slightly more than 24 percent. In the majority of those cases, 83 percent, market conduct examinations resulted. Those exams showed a majority had likely compliance trouble spots—including problems in rating, claims handling, underwriting and other company functions. Clearly, complaints make a difference.

Pam Ewing (Wolters Kluwer) shares results of a recent survey showing how complaints do lead to market conduct exams.
Pam Ewing (Wolters Kluwer) shares results of a recent survey showing how complaints do lead to market conduct exams.

From a regulator’s point of view
Regulators are interested in how a better job of exams—from both the regulator and business point of view—can be performed. While some still believe in comprehensive and targeted exams, others find market analyses triggered by complaints are a better way to go. Many DOIs believe the latter is more productive for all, while enhancing consumer outcomes.
Using market analyses to determine what entities have exams can help DOIs provide systematic review of all insurers within a state. After ranking and scoring, each company’s scorecard can be reviewed by category—those who rate poor in overall scores may get a closer look.

However, using complaints as a market-analysis tool may have drawbacks. Panelists noted complaints are usually anecdotal and not always creditable and consumers are not always right. In addition, not all product lines lend themselves to complaint data, such as life products.

Gerard O’Sullivan (CT DOI) serves as a presenter and moderator for this interactive panel segment on market conduct issues.
Gerard O’Sullivan (CT DOI) serves as a presenter and moderator for this interactive panel segment on market conduct issues.

Regulatory responses
DOIs use data to help guide responses toward insurers, but data is not the only input point. One of the most important issues is to assess how immediate the negative impact might be on the consumer.

With information, regulators determine how to respond. Responses include contact (calls, data collection, one-up meetings), examination, enforcement and closure—one, all, or part, of a response is done on an a la carte basis. Regulators want to work with companies to get information in the least intrusive, least costly, method possible.

Because complaint information is still the most important single data point for gathering information on a company, panelists agreed that reconciliation remains important to regulators and companies. Clearly, without reconciliation, the danger of putting negative information out to the public remains high.

Panelists noted that some companies work to establish internal calculations for DOIs to identify problem areas prior to regulators getting involved.

Chuck Vanasdalan (NH DOI) shares a variety of tools DOIs utilize in communicating with insurer about complaints.
Chuck Vanasdalan (NH DOI) shares a variety of tools DOIs utilize in communicating with insurer about complaints.

From the insurer’s point of view
Best practices shared from the corporate point of view to help mitigate the number and severity of complaints included:

  • The need for a professional and trained consumer affairs office.
  • Response letters with clear information stated well and accurately.
  • Companies should have a template that provides all parties names, addressee, subject, framing reference, cause-and-effect information and recommended solutions.
  • Correspondence should be timely, complete, appropriate in tone and accurate.

Panelists cautioned that to not address any one of these standards may inflame a complaint situation, ultimately damage working relations with regulators, AND tarnish corporate reputations. In addition, all agreed that a complaint file should be monitored so that when correspondence becomes unwieldy, a call or a visit should be initiated—and that action may shift a negative dynamic.

No insurer wants complaints, but it was recognized that complaints, coupled with complaint analysis, can help identify gaps—gaps in training, consumer understanding, and more, so that deficiencies can be addressed. Insurers were urged to initiate comprehensive complaint response plans, but to start small and continue to evolve. As with any worthwhile venture, reinforce positive models and eliminate those that are less positive. A great complaint response plan provides feedback and monitoring by line, office or state.

Christine Palmieri (Travelers) states a given: no company wants complaints, but they happen.
Christine Palmieri (Travelers) states a given: no company wants complaints, but they happen.

Get to the heart—communication works
Insured and regulators agreed that communication works. Regulators pointed out they want information to assist consumers—they don’t want to ask for things that make no sense. They encouraged companies to engage in a dialogue. If appropriate, ask why a regulator is requesting specific information. Requests can be changed and mitigated when both parties are communicating in a positive manner. Simply put—start talking: with regulators, with consumers and internally to get to the heart of any complaint and to get it resolved.

 

 

PRESENTATIONS
Click here to view Ewing’s presentation
    • Click here to view Ewing’s handout

Click here to view Vanasdalan’s presentation.

CONTACT INFO
Pam Ewing
General Manager
Wolters Kluwer Financial Services
130 TGurner St., Building 3
Waltham, MA  02453
781.907.6620
pam.ewing@wolterskluwer.com
www.wolterskluwer.com

Christine Palmieri
VP
Travelers
One Tower Square
Hartford, CT  06489
860.277.7327
cpalmier@travelers.com
www.travelers.com

Gerard O’Sullivan
Consumer Affairs Manager
Connecticut Insurance Department
PO Box 816
Hartford, CT  06142-0816
860.297.3889
Gerard.O’Sullivan@ct.gov
www.ct.gov

Charles Vanasdalan
Chief Market Analyst
New Hampshire Insurance Department
21 S. Fruit St., Suite 14
Concord, NH  03301
603.271.7973, X267
Charles.vanasdalan@ins.nh.gov
www.nh.gov/insurance

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