Market Conduct Reform Efforts Deal With Gathering And Use Of Data

Observers have pointed out that if the data is broken out going forward, that would be acceptable, but if the data was for all policies, then there could be comparisons between current contracts and policies issued decades ago when smaller face amounts actually represented greater amounts of insurance purchased in relation to income at that time.

The issue of whether data should be gathered from existing sources or whether the focus should be on gathering new data has also been raised.

For example, there is the issue of requiring state-specific information vs. more general information found in current regulatory financial filings. It has been noted that information on lapse ratios in the regulatory financial statements or blue books could be used by regulators to determine if there was unusual activity.

Birnbaum said that if the dialogue centered on existing data, then it would not be necessary to engage insurers in dialogue.

It would not be more difficult to parse information that is currently being provided on a state basis, he added.

But insurers disagreed. What is costly is the programming that would be needed to provide such information, insurers suggested.

What is important, regulators said is data that would flag potential problems such as evidence of many policy replacements or a trend in loans being taken out on an existing policy to pay for a new one.

Reproduced from National Underwriter Life & Health/Financial Services Edition, May 13, 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.