Market Conduct—the path of a complaint

Chris Palmieri, Travelers, moderated this panel discussion that traced the path of a complaint and showed how the response at specific points may change the trajectory of that complaint. On the path are, of course, spots where regulators determine what requires a little more scrutiny and what does not.

The regulators framed the session by pointing out that they understand that many complaints are not justified, but also that each has to be followed up upon. Some regulators use the complaint information to trigger consumer education—a good result of what may have been a negative and a way for DOIs to reach out to consumers.  Regulators pointed out both ICAE participants AND DOIs have the same consumer interests at heart and the interaction should not be adversarial.

The discussion started with regulators reviewing how they determine whether a complaint is justified. The answers were straightforward and came down to whether the complaint resulted from a clear departure from a stated contract or statute and/or departure from accepted business practices for the area.

The discussion evolved with the regulators discussing how they determine when a complaint should be escalated.   Generally, the regulators mentioned that, although market conduct exams are the last thing regulators are looking for, some behaviors will trigger more intense scrutiny:

  • Legislators requesting insight on complaint data
  • Companies resistant to or attempting to obfuscate the formalized complaint processes
  • Violations that pop up as a result of the complaint (such as unauthorized agents) but are not a part of the complaint per se.

Panelists for this session included Melissa Hield, Texas DOI; and Gerard O’Sullivan and Kurt Swan both from Connecticut Insurance Department.
Panelists for this session included Melissa Hield, Texas DOI; and Gerard O’Sullivan and Kurt Swan both from Connecticut Insurance Department.

Peek under the tent: Process for complaints
The regulators discussed next-step responses, when a complaint requires additional attention. The regulators noted they had a variety of types of responses that are on a continuum. They type of response is based on the complaint information and how the information came to the regulator. Next steps may include:

  • Internal investigation
  • Work with the companies to create a corrective action plan (may include self-audit or training programs)
  • Phone call or meeting to get more information
  • Targeted exam
  • Referral to NAIC to determine if a multi-state exam is necessary
  • Market conduct exam

Regulator expectations
Regulators across the board expect proactive responses and company interaction.  Self-reporting is important in how regulators work with companies.  In addition, regulators always look at how a company works with the consumer in making the consumer whole and actual follow through on promises (to regulator and consumer).  Regulators encouraged companies to completely understand that states now share information and so multi-state companies should always initiate a proactive discussion with all affected states. Information between regulatory agencies within states also occurs.

Relationships are key
What is regulator reaction to companies perceived as not being forthcoming?  Not good. Most regulators simply want companies to pick up the phone and provide complaint information and company processes so that regulators have a comfort level of company intent.  Also, company representatives were encouraged to ensure all divisions within a company (marketing, accounting) are knowledgeable about the complaint process so that each member of the company understands the importance of regulation—not just the compliance, consumer affairs and underwriting divisions.

From the floor, companies took the opportunity to ask for regulator insights:

  • Because timelines for responses vary greatly by state, would state DOIs consider inserting the actual date for response from the companies so that companies do not have to guess or track postmarks?  (see response from Connecticut in this edition of Catalyst).
  • Do regulators have a timeline internally to determine what information is asked for?
  • Does DOI have an internal deadline for turning the query/complaint from consumer to the company?

What are the answers?  Well, you should attend to reap the full benefit of consumer representatives and regulators interacting informally for the good of the consumer.

Time ran out before the questions did.  As the session ended, Ms. Hield (Texas) invited all company representatives to the Texas Department of Insurance invited to visit and review the complaint list so that reconciliation of internal company and DOI data could take place.

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