september series - pennsylvania insurance department · 7 outreach division cindy fillman...
TRANSCRIPT
Market Analysis ~ September Series
www.insurance.pa.gov
R b t L P tt A ti PA I C i i
www.insurance.pa.gov
Market Analysis ~ September Series
Presented by:The Pennsylvania Insurance Department
September 16, 2010
8 a.m. to 3 p.m.Property & Casualty
focus
September 30, 2010
8 a.m. to 3 p.m.Life, Accident & Health
focus
Temple University HarrisburgConference Center
234 Strawberry Square, Harrisburg, PA 17101www.temple.edu/harrisburg
Market Analysis ~ September Series
www.insurance.pa.gov
2
Welcoming Comments and Useful Information
Scanning Today's Program
Brief Overview of the Department
Brief Overview of the PA Market
PA Complaint Overview
Program Overview ~ Setting the Stage
Ron Gallagher, Deputy Insurance [email protected]
Market Analysis ~ September Series
www.insurance.pa.gov
3
Our Sponsors:
The Insurance Federation of Pennsylvania, Inc.
PA Association of Mutual Insurance Companies
Market Analysis ~ September Series
www.insurance.pa.gov
4
Who is in the audience today?
(as of 9/24/10)
28 Carriers
Legislative Staff
House of Representatives Senate Banking Committee
7 Law Firms
1 Trade Groups
Maryland Insurance Administration
PA Insurance Department Presenters, Support Staff and Legal Counsel
Useful Information
Market Analysis ~ September Series
www.insurance.pa.gov
5
Scanning Today’s Program:
8:00 Registration
8:30 Setting the StageRon Gallagher, Deputy Commissioner forMarket Regulation
9:00 “Undressing” Market AnalysisJeff Arnold, Market Analysis
10:00 The “411” for Carriers and Consultants Cindy Fillman, Director, Market Analysis and Education
10:30 Morning Break
10:45 Market Actions - A Year in ReviewChris Monahan, Director, Bureau of Market Conduct
11:15 Morning Wrap-up/Questions
11:45 Lunch (on your own)
1:00 Walk in the Regulator‘s ShoesParticipate in a workshop and conduct a market regulation committee session
2:00 Afternoon Wrap-up/Questions
2:30 Roundtable Discussion with Deputy Commissioners
Market Analysis ~ September Series
www.insurance.pa.gov
6
In s u r a n c e C o m m is s io n e r
O ff ic e o f G e n e r a l C o u n s e l O f f ic e o f C h ie f C o u n s e l
P o lic y O f f ic e
C o m m u n ic a t io n s O f f ic e
D e p u ty In s u r a n c e C o m m is s io n e r fo r M a rk e t
R e g u la t io n
D e p u ty In s u ra n c e C o m m is s io n e r fo r L iq u id a t io n s ,
R e h a b i l i ta t io n s , a n d S p e c ia l F u n d s
D e p u ty In s u r a n c e C o m m is s io n e r fo r C o rp o ra te
a n d F in a n c ia l R e g u la t io n
D e p u ty In s u ra n c e C o m m is s io n e r fo r C H IP
a n d A d u lt B a s ic In s u r a n c e
D e p u ty In s u r a n c e C o m m is s io n e r fo r In s u r a n c e
P r o d u c t R e g u la t io n a n d A d m in is t r a t io n
D e p u ty In s u ra n c e C o m m is s io n e r fo r M e d ic a l
C a re A v a i la b i l i ty a n d R e d u c t io n o f E r ro r
( M C A R E )
A d m in is t r a t iv e H e a r in g s O f f ic e
B u re a u o f M e d ic a l M a lp ra c t ic e A d m in is t r a t io n
D iv is io n s :
O p e ra t io n s S u p p o r t P o lic y A d m in is tr a t io n
D iv is io n s :P o l ic y a n d P la n n in gQ u a li ty A s s u r a n c e
O p e r a t io n s S u p p o r tM a r k e t in g a n d O u t r e a c h
B u r e a u o f L iq u id a t io n s a n d R e h a b i l i ta t io n s A d m in is t r a t io n
D iv is io n s :A s s e t M a n a g e m e n t
S u p p o r t S e r v ic e s
B u r e a u o f L iq u id a t io n C la im sD iv is io n s :
P r o p e r ty a n d C a s u a ltyL ife , A c c id e n t , a n d H e a lth
B u re a u o f S p e c ia l F u n d sD iv is io n s :
A u to C A T F u n dW o r k e rs C o m p e n s a t io n S e c u r i ty
F u n dU n d e rg r o u n d S to ra g e T a n k
In d e m n if ic a t io n F u n d
B u r e a u o f C o n s u m e r S e r v ic e s
R e g io n a l O f f ic e s :H a r r is b u r g
P h i la d e lp h ia
B u r e a u o f M a rk e t C o n d u c tD iv is io n s :
L i fe a n d H e a lth M a r k e t C o n d u c t
P ro p e r ty a n d C a s u a lty M a rk e t C o n d u c t
B u r e a u o f L ic e n s in g a n d E n fo r c e m e n t
D iv is io n s :L ic e n s in g S e r v ic e s
In fo r m a t io n S e rv ic e sL ic e n s in g C o m p lia n c e
F ie ld In v e s t ig a t io n sF r a u d
B u r e a u O f F in a n c ia l E x a m in a t io n s
B u re a u o f C o m p a n y L ic e n s in g a n d F in a n c ia l A n a ly s is
D iv is io n s :F in a n c ia l A n a ly s is
C o m p a n y L ic e n s in g
B u re a u o f A d m in is t r a t io nD iv is io n s :
H u m a n R e s o u r c e s a n d E q u a l E m p lo y m e n t O p p o r tu n ity
B u d g e tO f f ic e M a n a g e m e n t
B u r e a u o f P r o p e r ty a n d C a s u a lty In s u r a n c e
D iv is io n s :A c tu a r ia l R e v ie w
P o lic y R e v ie w
B u re a u o f L i fe In s u r a n c eD iv is io n s :
A c tu a r ia l R e v ie wP o lic y R e v ie w
B u r e a u o f A c c id e n t a n d H e a lth In s u r a n c eD iv is io n s :
A c tu a r ia l D iv is io nP o l ic y R e v ie w
O ff ic e o f th e B u d g e tC o m p tr o l le r ’s O f f ic e
B u r e a u o f M C A R E C la im s A d m in is t r a t io n
D iv is io n s :C la im s A d m in is t r a t io n
S u p p o r tP h ila d e lp h ia R e g io n a l
O f f ic eE a s te r n R e g io nC e n t r a l R e g io n
W e s te r n R e g io n
IN S U R A N C E D E P A R T M E N T
L e g is la t iv e O f f ic e
B u r e a u o f M a rk e t A n a ly s is a n d E d u c a t io n
M a r k e t S u r v e i l la n c e D iv is io n
Market Analysis ~ September Series
www.insurance.pa.gov
7
Outreach DivisionCindy Fillman
Market Analysis Division
Vacant, Supervisor
Deputy Insurance CommissionerRon Gallagher
Bureau of Consumer Services Carolyn Morris, [email protected]
783-9862
Bureau of Licensing and Enforcement
Jack Yanosky, [email protected]
705-0020
Harrisburg Regional Office
Roger [email protected]
705-4395
Philadelphia Regional Office
Leslie [email protected]
215-560-2630
L & H Market ConductYonise Paige
P & C Market ConductChet Derk
Licensing DivisionAdriane Force
Compliance DivisionJim Krebs
Program AnalystChristine Diep
Field InvestigationsDivision
Robert [email protected]
772-3598
Bureau of Market Analysis and Education
Cindy Fillman, [email protected]
783-2011
Fraud DivisionDeborah Lee
Bureau of Market Conduct
Christopher Monahan, [email protected]
787-9100
Executive Secretary Lori Magaro
Complaint Intake UnitBrenda John
Information Services Division
Ann Barnett [email protected]
783-2186
Office of Market Regulation
Sharon FraserBureau Support
Market Analysis ~ September Series
www.insurance.pa.gov
8
Overview of the PA Market:
$81 billion in Annual Premium 5th Largest Market in US 12th Largest Market in World
288 Domestic carriers
1,869 licensed carriers
181,327 licensed producers 72,301 residents 109,026 non-resident
$41 million to GF annually (approx)
$18.5 million budget annually (approx)
220 positions (approx on regulatory only)
Market Analysis ~ September Series
www.insurance.pa.gov
9
Overview of the PA Market ~ State Budget:
State 2010 RankNew York $556,976,000 1California $240,051,000 2Florida $114,423,066 3Texas $102,547,440 4Ohio $94,830,371 5Kentucky $40,532,900 6West Virginia $40,473,933 7North Carolina $29,863,635 8Louisiana $29,387,018 9New Jersey $29,198,000 10Michigan $29,020,800 11Maryland $27,361,093 12Virginia $26,256,198 13Delaware $25,087,000 14Connecticut $24,828,742 15Washington $23,182,000 16Illinois $22,619,000 17Pennsylvania $21,807,000 18Alabama $20,404,588 19Arizona $19,439,700 20
States in Descending Order of 2010 Budget
Market Analysis ~ September Series
www.insurance.pa.gov
10
States in Descending Order of 2008 Premium VolumeState 2008 Rank
California $220,922,831,947 1New York $150,859,397,709 2Florida $105,328,277,735 3Texas $99,037,673,043 4Pennsylvania $81,078,728,038 5Illinois $59,598,002,201 6New Jersey $59,467,162,770 7Ohio $55,366,587,161 8Michigan $50,998,104,902 9Massachusetts $43,551,960,738 10
Overview of the PA Market:
Market Analysis ~ September Series
www.insurance.pa.gov
11
Note: The 2009
market share information came from
the NAIC as of May 4,
2010.
Overview of the PA Market:
Groups which account for 95.05% of the Total A & H Direct Premium in PA
2009
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
Health Care Groups
Com
plai
nt In
dex
0
5
10
15
20
25
30
35
Mar
ket S
hare
(per
cent
age)
Complaint Index 0.81 0.03 0.31 0.32 0.53 0.16 0.49 0.71 0.14 0.01
Market Share 5.61 3.07 30.81 28.35 4.86 3.1 6.01 2.37 8.47 2.4
AetnaUnited Health Highmark
Independence Blue
Cross
Coventry Corp Geisinger
Capital Blue Cross
Hospital Serv Assn of NEPA
UPMC Health
Systems
Health Partners of Philadelphi
Market Analysis ~ September Series
www.insurance.pa.gov
12
Overview of the PA Market:Groups which account for 50.46% of the Total
Life Direct Premium in PA2009
0.00
0.20
0.40
0.60
0.80
1.00
1.20
Life Groups
Com
plai
nt In
dex
0
1
2
3
4
5
6
7
8
9
Mar
ket S
hare
(per
cent
age)
Complaint Index 0.05 0.28 0.63 0.56 0.11 1.00 0.19 0.04 0.10 0.38
Market Share 3.44 5.12 8.35 7.01 3.52 3.57 4.61 5.48 5.49 3.87
State Farm Lincoln Natl Metropolitan Prudential of Amer
Mass Mut Life Ins
Aegon US Holding Grp
New York Life
Northwestern Mut
John Hancock
Axa Ins
Note: The 2009 market share information came from the NAIC as of May 4, 2010.
Market Analysis ~ September Series
www.insurance.pa.gov
13
Total Assistance(Complaints, Phone calls, Hotline, Internet Requests, Walk-ins)
26,16027,656 27,803
22,17625,628
21,893
27,432
23,969
95,694
107,023
0
15,000
30,000
45,000
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.Quarter
No.
of C
ompl
aint
s
0
20,000
40,000
60,000
80,000
100,000
120,000
2008 2009 2010
Year
Cum
ulat
ive
Tota
l
PA Complaint Overview:
Market Analysis ~ September Series
www.insurance.pa.gov
14
Assistance: Internet Requests
845905825740780 1021
832 866 806
1,021 3,661
0
5001000
15002000
2500
30003500
4000
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.Quarter
No.
of C
ompl
aint
s
500
1,000
1,500
2,000
2,500
3,000
3,500
4,0002008 2009 2010
Year
Cum
ulat
ive
Tota
l
PA Complaint Overview:
Market Analysis ~ September Series
www.insurance.pa.gov
15
Assistance: Phone Calls
19,40520,080
18,570.0
15,622
18,61915,090
20,64417,519
19,465
67,636
79,908
0
10,000
20,000
30,000
40,000
50,000
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.Quarter
No.
of C
ompl
aint
s
0
20,000
40,000
60,000
80,000
2008 2009 2010Year
Cum
ulat
ive
Tota
l
PA Complaint Overview:
Market Analysis ~ September Series
www.insurance.pa.gov
16
Total Assistance: Hotline
1,690 2,1581,800 1,952
2,393
1,614 1,719 1,722 1,653
6,789
7,735
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.Quarter
No.
of C
ompl
aint
s
0
2,000
4,000
6,000
8,000
10,0002008 2009 2010
Year
Cum
ulat
ive
Tota
l
PA Complaint Overview:
Market Analysis ~ September Series
www.insurance.pa.gov
17
Assistance: Walk-ins
153 170 128175 180
101
171 168 187
703 629
0
100
200
300
400
500
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.Quarter
No.
of C
ompl
aint
s
0
500
2008 2009 2010
Year
Cum
ulat
ive
Tota
l
PA Complaint Overview:
Market Analysis ~ September Series
www.insurance.pa.gov
18
Total Complaints Received
4,1255,500
4,573 4,327 4,025 4,259 4,349 3,782 3,584
17,43216,765
0
5,000
10,000
15,000
20,000
25,000
2008
2009
2010
2008
2009
2010
2008
2009
2010
2008
2009
2010
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
Quarter
No.
of C
ompl
aint
s
0
5,000
10,000
15,000
20,000
25,0002008 2009 2010
Year
Cum
ulat
ive
Tota
l
PA Complaint Overview:
Market Analysis ~ September Series
www.insurance.pa.gov
19
Accident and Health Complaints
1,017
1,358 1,2871,4341,310
2,629
1,532 1,400 1,4411,671
1,311 1,262
5,285
6,698
5,669
0
1,000
2,000
3,000
2007
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.Quarter
No.
of C
ompl
aint
s
0
1,000
2,000
3,000
4,000
5,000
6,000
7,0002007 2008 2009
Year
Cum
ulat
ive
Tota
l
Market Analysis ~ September Series
www.insurance.pa.gov
20
Accident and Health: Complaints Category2009
666
72 46
245
532
59
373
298
211
483477
648
763
75
226
495
0
200
400
600
800
1000C
laim
s H
andl
ing
Mar
ketin
g an
d S
ales
Pol
icyh
olde
r Ser
vice
s
Und
erw
ritin
g
Cla
ims
Han
dlin
g
Mar
ketin
g an
d S
ales
Pol
icyh
olde
r Ser
vice
s
Und
erw
ritin
g
Cla
ims
Han
dlin
g
Mar
ketin
g an
d S
ales
Pol
icyh
olde
r Ser
vice
s
Und
erw
ritin
g
Cla
ims
Han
dlin
g
Mar
ketin
g an
d S
ales
Pol
icyh
olde
r Ser
vice
s
Und
erw
ritin
g
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
No.
of C
ompl
aint
s
`
Market Analysis ~ September Series
www.insurance.pa.gov
21
Life Complaints
423391503 449 475
266
452519
456382
594544
1,740
1,9461,768
0
500
1000
1500
2007
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.Quarter
No.
of C
ompl
aint
s
0
600
1,200
1,800
2,4002007 2008 2009
Year
Cum
ulat
ive
Tota
l
Market Analysis ~ September Series
www.insurance.pa.gov
22
Life Complaints: Total Complaints by Category2009
361
4129
154
42
269
455774757039
11480
38
280
0
100
200
300
400
Cla
ims
Han
dlin
g
Mar
ketin
g an
dS
ales
Pol
icyh
olde
rSe
rvic
es
Und
erw
ritin
g
Cla
ims
Han
dlin
g
Mar
ketin
g an
dS
ales
Pol
icyh
olde
rSe
rvic
es
Und
erw
ritin
g
Cla
ims
Han
dlin
g
Mar
ketin
g an
dS
ales
Pol
icyh
olde
rSe
rvic
es
Und
erw
ritin
g
Cla
ims
Han
dlin
g
Mar
ketin
g an
dS
ales
Pol
icyh
olde
rSe
rvic
es
Und
erw
ritin
g
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
No.
of C
ompl
aint
s
Market Analysis ~ September Series
www.insurance.pa.gov
23
Market Regulation Committee:
Deputy for Market
Regulation
Director, Consumer Services
Deputy for Product
Regulation
Bureau Director for
Product Type
Deputy for Financial
RegulationMarket
Analysis Staff
Director, Market
Analysis &
Education
Market Analysis
Chief
Director, Market Actions
Product Area,Division Chief,
Market Actions
Background
• Multidisciplinary Analysis
• Decides on course of action regarding continuum
• Reviews Level 1 Analysis, Complaint Analysis, Product Filings, Financial Health
• Meets 6-9 times annually
Market Analysis ~ September Series
www.insurance.pa.gov
24
2008 Market ActionsTotal Projects = 94
Continuums: Interrogations, Phone Calls,
Meetings14%
Market Conduct Exams
31%
Studies/Education Reviews
55%
Market Conduct Examinations:
Market Analysis ~ September Series
www.insurance.pa.gov
25
Market Conduct Examinations:
2009 Market ActionsTotal Projects = 152
Oversight Compliance
Reviews3%
Studies/Education Reviews
58%
Market Conduct Exams
17%
Continuums: Interrogations, Phone Calls,
Meetings22%
Market Analysis ~ September Series
www.insurance.pa.gov
26
“Undressing” Market Analysis ~ Overview of baseline, market conduct annual statement
(MCAS), Level 1 data
Jeffrey Arnold, Market Analysis [email protected]
Market Analysis ~ September Series
www.insurance.pa.gov
27
Baseline Analysis
Market Conduct Annual Statement
Level 1 Review
“Undressing” Market Analysis Overview:
Market Analysis ~ September Series
www.insurance.pa.gov
28
Uses data as a benchmark from which deviations and comparisons are measured
Systematic process whereby basic parameters are used to evaluate the entire marketplace
Used to identify companies that may require a more detailed and thorough analysis
Baseline Analysis:Baseline Analysis:
Market Analysis ~ September Series
www.insurance.pa.gov
29
Private Passenger Auto
Homeowners
Individual Life
Individual Annuity
Group Life
Group Annuity
Accident & Health
Group Accident & Health
Credit
Medicare Supplement
Long Term Care
Baseline Analysis:Baseline Analysis:
Market Analysis ~ September Series
www.insurance.pa.gov
30
Market Analysis Prioritization Tool (MAPT)
Select companies with over $100,000 in direct premiums written
Select specific information from the report to conduct baseline analysis
Baseline Analysis:Baseline Analysis:
Market Analysis ~ September Series
www.insurance.pa.gov
31
Measures a company’s performance, in terms of complaints, against another company’s in the same market
Measures changes in a company’s complaint performance over the analysis period
Complaint ratios are based on a company’s specific information and provides a ratio of confirmed complaints per $1,000 of premium
Complaint ratios are needed for each company to calculate the complaint index
Measures a company’s performance relative to other companies in the same market
The average complaint index is always 1.0 for a market for analysis purposes
Consumer Complaint Data:
Market Analysis ~ September Series
www.insurance.pa.gov
32
Find companies with significant fluctuations in premium volume
Companies should be identified with dramatic growth (33% or more)
Companies should be identified with dramatic decline (10% or more)
Premium Volume:
Market Analysis ~ September Series
www.insurance.pa.gov
33
Compare changes in losses and changes in reserves
Identify companies with a spike in reserves without a corresponding increase in losses paid
Losses and reserves should be moving in the same direction at a similar rate
Reserves:
Market Analysis ~ September Series
www.insurance.pa.gov
34
Identify companies with loss ratios that are significantly higher or lower than other companies in the same market
Identify unusual trends or year to year variations
Private passenger auto and homeowners
Loss Ratios:
Market Analysis ~ September Series
www.insurance.pa.gov
35
Determine if companies have had a significant change in defense costs from year to year
Determine whether defense costs are moving in correlation to direct losses and premium volume
Defense costs should be rising relative to increases in premium volume and losses
Defense Costs:
Market Analysis ~ September Series
www.insurance.pa.gov
36
Insurance Regulatory Information System (IRIS)
Tool designed to assist insurance departments in monitoring the industry’s financial condition
Identify potential financial difficulties
There is a separate series of IRIS ratios for P&C and L&H companies
IRIS ratios are a preliminary screening tool
IRIS ratios outside the pre-established norm do not necessarily indicate an adverse financial condition
The IRIS ratio merely provides a signal to follow-up to determine the cause of the changes in the company measured by the ratio or ratios in question
IRIS Ratios:
Market Analysis ~ September Series
www.insurance.pa.gov
37
P & C
Gross Premium to Surplus
Net Premium to Surplus
Change in Net Writings
Liabilities to Liquid Assets
L&H
Net Change in Capital and Surplus
Gross Change in Capital and Surplus
Change in Premium
Change in Product Mix
Market Analysis ~ September Series
www.insurance.pa.gov
38
The Market Conduct Annual Statement (MCAS) is a uniform method for states to collect key data regarding:
• Individual Life cash and non-cash value products
• Group Life cash and non-cash value products
• Individual fixed and variable annuities
• Private Passenger Auto and Homeowners
Market Conduct Annual Statement (MCAS):
(health insurers do not provide MCAS data)
Market Analysis ~ September Series
www.insurance.pa.gov
39
Regulated entities may download instructions and a data collection program from the NAIC
Allows state regulators to compare and contrast entity-specific results with the remainder of the industry regarding such issues as:
Replacements
Nonforfeitures
Complaints
Life Insurance Face Values
Cancellations
Claims taking longer than 60 days to finalize
Market Conduct Annual Statement:
(health insurers do not provide MCAS data)
Market Analysis ~ September Series
www.insurance.pa.gov
40
Call Letter is sent by the NAIC with instructions on how to load data
Company sends data to Insurance Department to be loaded into Database
Certificate of Compliance
Data Integrity checks are performed to ensure data is correct (20% variance in premium)
Market Conduct Annual Statement:
(health insurers do not provide MCAS data)
Market Analysis ~ September Series
www.insurance.pa.gov
41
Statewide averages are viewed
Company data is viewed to determine if there are company ratios that exceed the statewide averages
Company report cards are developed and sent to companies
Company outliers are identified
Outliers are analyzed and compared with companies identified as possible outliers through baseline analysis
Identify companies that may need to have a Level 1 Review conducted
Market Conduct Annual Statement:
(health insurers do not provide MCAS data)
Market Analysis ~ September Series
www.insurance.pa.gov
42
MCAS does not pertain to Accident and Health Insurance
Market Analysis ~ September Series
www.insurance.pa.gov
43
The Division of Market Analysis uses the Level 1 review as a tool to learn more about a company’s:
Operations
Financial Ratios
Special Activities (SAD)
Regulatory Actions
Examinations
Level 1 Review:
Market Analysis ~ September Series
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44
Market Initiative Tracking System (MITS)
Premiums
Market Share
Resisted or Unpaid Claims
Complaints
Market Conduct Annual Statement
Conclusion
Level 1 Review:
Market Analysis ~ September Series
www.insurance.pa.gov
45
Significant changes in officers, directors or trustees over last 3 years
Changes in company’s organization, management or operations
Mergers or consolidations
Revocation of Certificates of Authority, licenses or registration
Change in state of domicile
Operations:
Market Analysis ~ September Series
www.insurance.pa.gov
46
Review RBC ratios for the last 5 year period
Has the company’s RBC ratio triggered any action level events or has the RBC ratio significantly declined during the period
Defense costs should be rising relative to increases in premium volume and losses
Financial Ratios:
Market Analysis ~ September Series
www.insurance.pa.gov
47
Company Action
Regulatory Action
Authorized Control Level
Mandatory Control Level
Level 1 Review:
Market Analysis ~ September Series
www.insurance.pa.gov
48
Entries in the NAIC’s Special Activities Database (SAD) of substantive concern over past 5 years
Market Activities
Legal Actions
Special Activities:
Market Analysis ~ September Series
www.insurance.pa.gov
49
Substantive regulatory actions
Reasons for actions
Patterns
High dollar penalties
Regulatory Actions:
Market Analysis ~ September Series
www.insurance.pa.gov
50
Review Exam Tracking System (ETS) summary
More than 3 exams in past 12 months
Substantive concerns
Patterns
Exam triggers
Examinations:
Market Analysis ~ September Series
www.insurance.pa.gov
51
Review company’s direct premium reported on a national and state basis
Has premium increased or decreased by 33% in any single year during last 5 years
Is company keeping up with growth (claims staff)
Why is there a decrease in premiums (solvency)
Premiums:
Market Analysis ~ September Series
www.insurance.pa.gov
52
Significant Changes in market share for state under review over last five years
Specific line of business
U.S. Market Share:
Market Analysis ~ September Series
www.insurance.pa.gov
53
For the lines of business under review in all jurisdictions, are loss and expense ratios unusually high or low as compared to industryaverages?
In the state and lines of business under review, are loss and expense ratios unusually high or low as compared to industry averages?
Loss and Expense Ratios:
Market Analysis ~ September Series
www.insurance.pa.gov
54
Review Premium written
Direct defense and cost containment expenses paid
Direct Losses Incurred
Industry averages over last 5 years
Resisted or Unpaid Claims:
Market Analysis ~ September Series
www.insurance.pa.gov
55
Significant changes in confirmed Complaint Index current year plus four years
Significant changes in complete Complaint Index current year plus four years
Review 5 year complaint report
Complaints:
Market Analysis ~ September Series
www.insurance.pa.gov
56
Does a state participate?
Applicable to line of business under review?
Identified as outlier?
What Schedules is company considered an outlier? (PPA, HO, ILCVP, ILNCVP, GL, IFA, IVA)
Statewide average comparisons (Ratios of concern) (MCAS)
Market Conduct Annual Statement:
Market Analysis ~ September Series
www.insurance.pa.gov
57
What is recommended for the next step upon completion of the Level 1 review?
Direct contact with the company
Investigation is scheduled
Examination is scheduled
Enforcement Action may be scheduled
Conclusion:
Contact the Collaborative Action Designee (CAD) of other states with similar concerns
Proceed with another option on the continuum of regulatory responses (develop letter to company, phone call, conference call, or meet with company)
No further analysis is necessary
Level 2 is scheduled
Market Analysis ~ September Series
www.insurance.pa.gov
58
An internal report that shows confirmed complaints and/or enforcement referrals for a specified window of time for a company
COGNOS Reports:
Market Analysis ~ September Series
www.insurance.pa.gov
59
Reports are developed from a combination of findings from:
Baseline Analysis
Market Conduct Annual Statement
Level 1 Review
COGNOS Report
Reporting:
Market Analysis ~ September Series
www.insurance.pa.gov
60
Findings are presented to the Market Regulation Committee
Deputies and Directors of the various program areas of the Insurance Department
Action to be taken
Market Conduct Exam
Monitor through future analysis
Continuum through a meeting
Continuum through letter or phone call
Other
Reporting:
Market Analysis ~ September Series
www.insurance.pa.gov
61
The “411” for Carriers and Consultants
Cindy Fillman, Director, Bureau of Market Analysis and [email protected]
&
Christopher Monahan, Director, Bureau of Market [email protected]
Market Analysis ~ September Series
www.insurance.pa.gov
62
Educational Reviews
Studies
Questionnaires
Informing your Regulator:
Market Analysis ~ September Series
www.insurance.pa.gov
63
• Act 62-Autism Mandate
• Initial letter-expectations
• Reports
• Many interventions
• Follow up reports-to inform legislative report
Educational Review-A Case Study:
Market Analysis ~ September Series
www.insurance.pa.gov
64
Initial letter-expectations
Reassurance
Full disclosure
Purely educational
What PA did right
Studies-climate Change:
Market Analysis ~ September Series
www.insurance.pa.gov
65
Initial letter-expectations
Questionnaires-not mandatory but detailed. Usually in the insurers interest to share information.
Informs policy and potentially legislation
Questionnaires-Healthcare Reform:
Market Analysis ~ September Series
www.insurance.pa.gov
66
Healthcare Reform
Grant Applications High Risk Pool Exchange Consumer Assistance Program
Other Policy Issues
Climate Change Autism Title Insurance
Division of Education:
Market Analysis ~ September Series
www.insurance.pa.gov
67
Market Actions ~ A Year in Review
Christopher Monahan, Director, Bureau of Market [email protected]
Market Analysis ~ September Series
www.insurance.pa.gov
68
Nine lines of insurance and 1,283 insurance companies were analyzed through baseline analysis from 2008 data. Baseline analysis included review of:
Baseline Analysis:
266 individual life and annuities insurers
119 group life and annuities insurers
62 Medicare supplement insurers
37 credit insurers
214 private passenger automobile insurers
166 homeowners insurers
56 long-term care insurers
174 individual accident and health insurers
189 group accident and health insurers
Market Analysis ~ September Series
www.insurance.pa.gov
69
Baseline analysis scoring includes the use of:
Division of Market Analysis Scoring Model
NAIC Market Analysis Prioritization Tool (MAPT)
MCAS Scoring Model
All three scoring models or tools are used to create aggregate scores for all companies in baseline analysis process
Scores are used as primary tool to select outliers
Baseline Analysis:
Market Analysis ~ September Series
www.insurance.pa.gov
70
132 outliers from baseline analysis also underwent level 1 analysis in 2008. This is up from last year when 125 companies underwent Level 1 analysis for 2007 data. The number of companies undergoing Level 1 analysis for each line of insurance looks like this:
28 for long-term care and/or Medicare supplement insurance
52 companies for private passenger automobile and/or homeowners lines
29 companies for individual and/or group life and annuities lines
20 for individual accident & health and/or group accident & health
3 companies for the credit insurance
NAIC mandates require PA to conduct a minimum of 40 level 1 reviews each data year and so, PA well exceeded its minimum requirement
Level 1 Analysis:
Market Analysis ~ September Series
www.insurance.pa.gov
71
From the 132 companies undergoing Level 1 analysis, a total of 68 of them rose to the level of being presented during 6 different MRC meetings over the past nine months.
Market Regulation Committee:
Market Analysis ~ September Series
www.insurance.pa.gov
72
The following summarizes the dispositions of the 68 companies presented to MRC based on 2008 data findings:
• 26 companies monitored through future market analysis projects
• 14 companies had meeting scheduled with the Department to gain more information and understanding about issues of concern
• 13 companies were contacted through interrogatories or phone calls to gain more information and understanding about issues of concern
• 6 companies needed us to follow-up with regulators from other states to better understand actions and initiatives involving the companies
• 6 companies had target market conduct examinations called
• 2 companies had suspended market conduct examinations re-opened
• 1 company had a comprehensive market conduct examination called
Market Regulation Committee:
Market Analysis ~ September Series
www.insurance.pa.gov
73
During 2009, 48 market conduct examinations were closed resulting in:
$1,063,112 in penalties
$1,119,350 in restitution to PA consumers
The number of market conduct examinations called by the Department has been decliningover the past three years
Market Conduct Examinations:
Market Analysis ~ September Series
www.insurance.pa.gov
74
3 Year Overview of Exams
Market Conduct Examinations:
2007 2008 2009P & C 43 24 14L & H 22 5 12
Oversights and Multi-State Exams Open 2 0 5
Total Exams Opened 67 29 31P & C 20 31 29L & H 21 18 16
Oversights and Multi-State Exams Closed 3 3 3
Total Exams Closed 44 52 48
Exams Opened
Exams Closed
Market Analysis ~ September Series
www.insurance.pa.gov
75
Market Conduct Examinations:
2008 Market ActionsTotal Projects = 94
Continuums: Interrogations, Phone Calls,
Meetings14%
Market Conduct Exams
31%
Studies/Education Reviews
55%
Market Analysis ~ September Series
www.insurance.pa.gov
76
Market Conduct Examinations:
2009 Market ActionsTotal Projects = 152
Oversight Compliance
Reviews3%
Studies/Education Reviews
58%
Market Conduct Exams
17%
Continuums: Interrogations, Phone Calls,
Meetings22%
Market Analysis ~ September Series
www.insurance.pa.gov
77
Morning Wrap-up ~ Questions
Market Analysis ~ September Series
www.insurance.pa.gov
78
Lunch
Market Analysis ~ September Series
www.insurance.pa.gov
79
Walk in the Regulator’sShoes
Market Analysis ~ September Series
www.insurance.pa.gov
80
Market Regulation Committee:
Deputy for Market
Regulation
Director, Consumer Services
Deputy for Product
Regulation
Bureau Director for
Product Type
Deputy for Financial
RegulationMarket
Analysis Staff
Director, Market
Analysis &
Education
Market Analysis
Chief
Director, Market Actions
Product Area,Division Chief,
Market Actions
Background
• Multidisciplinary Analysis
• Decides on course of action regarding continuum
• Reviews Level 1 Analysis, Complaint Analysis, Product Filings, Financial Health
• Meets 6-9 times annually
Market Analysis ~ September Series
www.insurance.pa.gov
81
Afternoon Wrap-up ~ Questions
Market Analysis ~ September Series
www.insurance.pa.gov
82
Roundtable Discussion with Deputy Commissioners
Market Analysis ~ September Series
www.insurance.pa.gov
Robert L. Pratter, Acting Pa Insurance Commissioner, [email protected]
Ron Gallagher, Deputy Insurance Commissioner, Office of Market Regulation [email protected]
Randy Rohrbaugh, Deputy Insurance Commissioner,Office of Insurance Product Regulation and Administration [email protected]
Steve Johnson, Deputy Insurance Commissioner,Office of Corporate and Financial Regulation [email protected]
Cindy Fillman, Director, Bureau of Market Analysis and Education, [email protected]
Carolyn Morris, Director, Bureau of Consumer Services, [email protected]
Jack Yanosky, Director, Bureau of Licensing and Enforcement, [email protected]
Christopher Monahan, Director, Bureau of Market Conduct [email protected]