Market Conduct Triggers: Panel discussion

Danny Saenz (Texas DOI) moderates a panel segment on market conduct triggers. Participating as panelists are (l to r) Ignatius Wheeler (Texas DOI), Betty Patterson (consultant) and Susan Hatfield (Nationwide).
Danny Saenz (Texas DOI) moderates a panel segment on market conduct triggers. Participating as panelists are (l to r) Ignatius Wheeler (Texas DOI), Betty Patterson (consultant) and Susan Hatfield (Nationwide).

Capturing the intellectual capital shared during a panel discussion never fully integrates the personality of the event.  And his panel discussion was no exception.  Participating were Susan Hatfield, Nationwide Insurance; Betty Patterson,  Betty Patterson Consulting, LLC; Ignatius Wheeler, Texas Department of Insurance; and Danny Saenz, Texas Department of Insurance (moderator).

Together, the panelists discussed how they can better do their job.  Noting that change can be unsettling, Wheeler and Saenz discussed changes at the Texas Department of Insurance (TDI).  Ever looking to improve processes on market conduct, the TDI is working to handle market conduct exams with a common-sense, rather than punitive, approach. Specifically, TDI works with enforcement to determine when a penalty vs. warning letter is warranted and is tracking information to determine when willful neglect—rather than a mistake—has occurred.

 

Now a consultant, previous Texas DOI staffer Betty Patterson works with many state regulators and companies offering her expertise on market conduct issues.
Now a consultant, previous Texas DOI staffer Betty Patterson works with many state regulators and companies offering her expertise on market conduct issues.

Patterson, who works with many different state regulators, noted the TDI has a strong, positive reputation throughout the country.  She noted that regulators and companies must work to eliminate silos of information—and her experience indicates that when silos are eliminated, the market conduct exam becomes a much more valuable experience.

The group mused on how industry and regulators can work to handle the frequent complainer—defined as the same person with multiple issues or same complaint over and over again.  The panelists agreed this was an area where the departments of insurance (DOI) and carriers should have working relationships so that consumers can hear a uniform message on a positive course of action.

The panelists opened up the remaining time to hear what was of specific interest for the group regarding market conduct triggers:

Q: In a market conduct exam, do DOIs look at complaints as a whole to note developing trends?

A:  In general, DOIs will look at trends and compare companies to industry averages.  When a trend is identified, most DOIs will address it with the company directly—a trend does not always trigger a market conduct exam. Non-standard auto and long-term care are both products where many organizations are noticing more complaints; as a result, DOIs are placing stronger scrutiny on these products.

 

Ignatius Wheeler (Texas DOI) provides input on some market conduct triggers.
Ignatius Wheeler (Texas DOI) provides input on some market conduct triggers.

Q:  Attending regulator asked if other DOIs used a no-knock standard for market conduct exams—especially in the non-standard auto business.  

A:  Texas Department of Insurance (TDI) answered that they’ve seen a rise in issues in the non-standard auto business; generally TDI does not enter into a no-knock review.  TDI works to catch issues in analysis and therefore tries hard not to use a no-knock option.

Other states discussed experiences with no-knock, on-the-spot exam—stating that some reason or behaviors triggers the spot exam.  All noted that, had the company been listening, the company would have known that a no-knock exam might be in its immediate future.

Q:  What is the value when using contract examiners?

A:  Texas does not use contract examiners, confident that in-house examiners provide better consistency.  Patterson noted that contractors have a definite niche, especially if the work load warrants the need. However, she agreed that contractors should be monitored carefully to ensure good information is not lost through the filter.

Q:  Are remote exams as effective as on-site exams?

A:  On-site interaction is important and in-person interviews will reveal much.  However, much can be done remotely, conserving time and travel resources.

Q:  What topics are looked at as triggers for market conduct exams?

A:  Complaints remain a significant trigger—at least top five.  However, other triggers include a significant increase in premiums, unclaimed property, unresolved issues; financial reviews may also spike an interest in an examination.

 

Susan Hatfield (Nationwide) suggests insurers provide regulators with their actions and efforts to work with the consumers prior to an exam.
Susan Hatfield (Nationwide) suggests insurers provide regulators with their actions and efforts to work with the consumers prior to an exam.

Q:  Are companies providing a roadmap to regulators by having exact information on vulnerabilities?

A:  Hatfield noted that showing exact issues prior to an exam caused regulators to be very impressed—regulators noted the company was working for the consumers.   Patterson noted that many DOIs like to see the proactive information and have not used the information against companies. Data shows carriers and DOIs want to move toward compliance, not penalties.  If a carrier is working toward restitution, penalties are less.

The NAIC has published a white paper on just this topic, entitled Regulatory Access to Insurer Information.

The document can be accessed at www.naic.org/store_pubs_whitepapers.htm#access. If this doesn’t work, enter www.naic.org. Click on NAIC Store; then, publications. Scroll down to White Papers and click on it; then, scroll down to the title below under Regulatory Issues.

Texas DOI deputy commissioner Danny Saenz moderates a panel segment on market conduct triggers.
Texas DOI deputy commissioner Danny Saenz moderates a panel segment on market conduct triggers.

CONTACT INFO
Susan Hatfield
AVP- Customer Relations
Nationwide Insurance
One Nationwide Plaza 3-4-101
Columbus, OH   43215
614.249.6408
hatfies@nationwide.com
www.nationwide.com

Betty Patterson
Consultant
Betty Patterson Consulting LLC
700 Lavaca, Suite 1400
Austin, TX   78701
512.334.6060
bettypattersonllc@gmail.com

Jose Daniel “Danny” Saenz
Deputy Commissioner
Texas Department of Insurance
333 Guadalupe
Austin, TX   78701
512.322.5035
danny.saenz@tdi.state.tx.us

www.tdi.state.tx.us

Ignatius Wheeler
Chief Examiner
Texas Department of Insurance
333 Guadalupe
Austin, TX   78701
512.322.5038
ignatius.wheeler@tdi.state.tx.us

www.tdi.state.tx.us

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