Market Data Project Cost Worries Insurers

By Jim Connolly, NU Life-Health Edition Senior Editor

NU Online News Service Aug. 27, 10:30 a.m. EST?A data collection pilot project that could help regulators targetmarket conduct exams is still raising cost-benefit concerns amonginsurers.

Initial reaction to an interim meeting held in Chicago Aug.22-23 by the National Association of Insurance Commissioners,Kansas City, Mo., found that while a large life insurer such asMetropolitan Life Inc., New York, is backing the project,property-casualty insurers are less sure.

In a survey of 62 companies conducted by a jointproperty-casualty trade group that includes the Alliance ofAmerican Insurers, Downers Grove, Ill.; the American InsuranceAssociation, Washington; the National Association of IndependentInsurers, Des Plaines, Ill.; and the National Association of MutualInsurance Companies, Indianapolis; cost was found to be a majorconcern.

Responses from the joint group's survey found that the cost percompany would range between $10,000 to $25,000, according to LenoreMarema, vice president-legal and regulatory affairs with theAlliance, one of the four trade groups working on the joint group.Full details of the survey's findings are due out today.

The responses, according to Ms. Marema, did not vary by premiumvolume, so it is not a big company, small company issue.

What is important to companies, she continued, is that the costto some roughly 800 companies be justified by benefits such asfocusing resources on targeted rather than on comprehensiveexams.

One positive development from the interim meeting in Chicagothat she noted was the extension of time for submitting data from45 days to 90 days.

The property-casualty industry will begin data gathering fromJan.-June 2003 and will submit reports to all states in the pilotproject by September 2003, Ms. Marema explained. A report will thenbe developed and presented by regulators by December 2003, shesaid.

The life insurance industry will report first on data fromJan.-June 2002 with a year-end 2002 report anticipated, said AnnHenstrand, a vice president of government affairs with MetLifeInc., New York.

"Very real progress was made at the meeting," she added.

The extension of the deadline to 90 days allows companies toprepare data but not pull IT resources from other projects, shesaid.

Ms. Henstrand also cited practical points such as putting spreadsheets companies would need to use on the NAIC Web site,www.naic.org, and designating a specific person at eachparticipating insurance department as the contact on the pilot forthat state.

For a company, like MetLife, according to Ms. Henstrand, thesuccess of streamlining the market conduct exam process isimportant because it saves time, money and resources. Given itssize, Met Life is the subject of a number of exams and requests candiffer, increasing costs, she said.