Market conduct analysis and examinations€¦ · Market Conduct Surveillance Act TEXAS DEPARTMENT...
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Market Conduct Analysis and Examinations Texas Department of Insurance
Transcript of Market conduct analysis and examinations€¦ · Market Conduct Surveillance Act TEXAS DEPARTMENT...
Market Conduct Analysis and Examinations
Texas Department of Insurance
Presenters
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Ignatius Wheeler, CFE, CFE (Fraud)
Chief Examiner
Financial Examinations
Matthew Tarpley, MPAff, MCM
Assistant Chief Examiner – Market Conduct
Financial Examinations
Topics of Discussion
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Examination Section Overview - How Market Conduct Fits in the Puzzle
Market Conduct and Analysis
• Market Conduct Surveillance Act – TIC Chapter 751
• Market Analysis Process
• Market Conduct Examinations
• Chapter 751 Timeline – Post Fieldwork Process
NAIC Multistate Examination Process
• Market Actions Working Group
• Multistate Examinations
Questions
Financial Examinations Section
Overview
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Financial Examinations Section Overview
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The Financial Examinations Section includes the following:
Financial Examinations
Automated Examinations
Market Conduct Examinations
Quality of Care Examinations
Title Examinations
Actuarial Office
Examinations Field Offices
• Dallas
• Houston
• San Antonio
Market Conduct
Market Analysis and Examinations
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Market Conduct Surveillance Act
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Texas Insurance Code Chapter 751
Framework for market conduct actions
• Market analysis
• Protocols for market conduct actions
• Coordination and collaboration with other states
Impact on Examinations
• Authority to target problem areas of an insurer for cause regardless of where they are domiciled
• The statute grants authority to the commissioner to conduct an examination of a domestic insurer once every three years; unless circumstances e.g. risk to consumers, requires action that is more frequent
• More efficient and effective examinations
• Confidentiality of examination reports and work papers
Market Analysis
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Market Conduct Annual Statement (MCAS):
Provides regulators with market conduct information reported by companies through the NAIC's on-line MCAS application
Market analysis is designed to:
Provide tools for each state to review its entire market
Identify companies operating in each state’s market that are potentially harming consumers
Assist in narrowing the scope of any regulatory action that a state determines it must use
Enhance collaboration among states
Market Analysis (continued)
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Steps in Market Analysis include:
Baseline Analysis – A systematic process by which basic parameters are used to evaluate the entire marketplace in order to identify those companies that require more detailed and through analysis
Level 1 Analysis – A more detailed review of companies that eliminates those that do not warrant further analysis and identifies the cause of the anomaly for those that do warrant additional analysis
Level 2 Analysis – A review process that confirms there is a market regulatory issue and can help determine the cause and extent of the problem
Continuum of Regulatory Responses – Actions that are available to states that would address regulatory issues or concerns e.g. meeting with the company or an examination
Market Conduct Examinations
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Type of Entities Examined Include:
Insurance Companies
Life Settlement Companies
Premium Finance Companies
Managing General Agents (MGAs)
Possible Triggers Include:
Market Analysis
Market Share
Financial Examinations
Current Events
Referrals From Other Divisions
Market Conduct Examinations (continued)
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Common Compliance Issues:
Agent Issues
• Appointments
• Licensing
Claims Handling
• Prompt Pay
• Required Notices
• Unfair Claim Settlement Practices
Clean Claims and Prompt Pay Quarterly Reports
MGA Contracts
Chapter 751 – Post Fieldwork ProcessExit Through Acceptance
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§751.205 – Before the conclusion of the examination, the examiner-in-charge shall schedule an exit conference with the insurer.
§751.206(b) – The commissioner shall deliver the draft examination report to the insurer not later than the 60th day after the date the examination is completed; the date the exam is completed is the date the exit conference is conducted.
§751.206(c) Not later than the 30th day after the date on which insurer receives the draft examination report, the insurer shall provide any written comments to the department.
§751.206(d) –TDI shall make a good faith effort to resolve issues with insurer informally.
§751.206(d) –TDI shall prepare the final exam report not later than the 30th day after the date of receipt of the insurer’s written comments.
§751.206(e) –TDI shall include the insurer’s responses in the final report.
§751.206(f) – Not later than the 30th day after receipt of the final report, the insurer shall accept the report, accept the findings of the report, or request a hearing.
EXIT CONFERENCE
Within 60 days after the exit TDI must deliverdraft exam report to Company
Within 30 days receipt of final draft, Company has option to provide written comments
TDI makes good faith effort to resolve issues
Within 30 days receipt comments, TDI sends final exam report to Company
Within 30 days, Company shall either accept the report, accept the findings of the report, or request a hearing at the State Office of Administrative Hearings
NAIC Multistate Examinations
Overview
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Market Actions Working Group (MAWG)
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MAWG consists of a diverse and geographically balanced membership
Through review, analysis and a national submission process, companies are identified that exhibit current or potential market regulatory issues of national impact
Reviews may be undertaken for companies or issues that reach a certain mass of regulatory activity or interest
MAWG facilitates efficient communication, collaboration, and coordination among states to address the regulatory issue in the most effective manner possible
Multistate Examinations
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Each state continually monitors the market for issues that may be of a national impact. Upon identifying a potential issue, the state will refer the company or companies to MAWG for consideration.
MAWG members will discuss the referral and vote whether or not to initiate a multistate examination.
Multistate examinations usually consist of one Managing Lead State (MLS) that bears the overall responsibility to facilitate communication and coordinate activities in an efficient manner, two or three Lead States whom share an equal responsibility to make all key decisions, and the Participating States that provide interpretation of the Participating State’s laws and respond to any requests for information.
When a multistate examination produces findings for which a regulatory penalty or sanction is contemplated, such action should be memorialized. This is most often accomplished through a Regulatory Settlement Agreement (RSA) negotiated by the Lead States.
Questions?
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