Faster Examinations A Focus Of Market Conduct Work

Issues to be examined include sales illustrations, replacement of policies, interest on death benefits and policy loans and cancellations.

During discussions with regulators over what is important for companies as market conduct exams are developed, Linda Lanam, vice president and deputy general counsel with the American Council of Life Insurers in Washington, said it is important that a company be able to specifically connect a penalty with a company action that comes to light during a market conduct examination.

She told regulators that when she worked for a company, it was difficult to discuss company concerns with a department representative unless a company representative attended an administrative hearing.

On the issue of data, Mike Velotta, senior vice president, secretary and general counsel with Allstate Life Insurance Company in Northbrook, Ill., said it is critical to draw a distinction between underlying data and what needs to be protected, which is a company's evaluation of that data.

The issue of self-critical analyses and the ability to keep those reports confidential have been part of an ongoing discussion between regulators and insurers. Regulators have argued that they need access to such reports while insurers say that if proper protections are not afforded, efforts to root out problems will leave them vulnerable to class action lawsuits.

Steph Zielezienski, assistant general counsel with the American Insurance Association in Washington, said it is necessary to protect both the self-critical analysis and the company representatives who developed that analysis.

The concern, according to Zielezienski, is that without proper laws in place, if regulators in one state share information with regulators in another state, then the privileged status of those reports would be forfeited and the documents could become public.

Reproduced from National Underwriter Life & Health/Financial Services Edition, January 7, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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