MCAS - Market Conduct Annual Statement - NAIC

  • Market Conduct Annual Statement Life & Annuities Data Call & Definitions
    • Cash Value Product – A life insurance policy that generates a cash value element. Term life policies with cash value are considered cash value products.
    • Lawsuits Closed During the Period with Consideration for the Consumer—A lawsuit closed during the reporting period in which a court order, jury verdict, or settlement resulted in payment, benefits, or other thing of value, i.e., consideration, to the applicant, policyholder, or beneficiary in an amount greater than offered by the reporting insurer before the lawsuit was brought.
    • Life Insurance Premiums – Funds used to purchase life insurance products issued by the company. Exclude Group Life and Credit Life premiums. For the purpose of this statement, life insurance premiums should be determined in the same manner used for the state pages of the company's financial annual statement.
    • Universal Life Insurance – A form of whole life insurance that is characterized by flexible premiums, flexible face amounts and flexible death benefit amounts and its unbundling of the pricing factor.
    • Variable Life Insurance – A form of whole life insurance under which the death benefit and the cash value of the policy fluctuate according to the investment performance of a separate account.
    • Variable Universal Life Insurance – A form of whole life insurance that combines the premium and death benefit flexibility of universal life insurance with the investment flexibility and risk of variable life insurance.
    • Whole Life Insurance – Life insurance that provides lifetime insurance coverage. Whole life insurance policies generally build cash value and cover a person for as long as he or she lives if premiums are paid as required. It would include life insurance policies that start accumulating cash value once the insured reaches a certain age as specified in the terms of the policy.
  • 2010 - NAIC - THE PATH TO MCAS, The NAIC, Regulators, Industry and Consumers Working Together to Build a Better Market Conduct Annual Statement System. Updated 10/28/2010 - 2p
  • MCAS Best Practices Guide
    • MCAS Best Practices Guide - 14p
      • The Market Conduct Annual Statement (MCAS) was developed with the input of state insurance regulators and representatives from the insurance industry to provide an analysis tool for certain key market data elements. Some of the states collected private passenger auto data as early as the 1990s. In 2003, the NAIC Market Regulation and Consumer Affairs (D) Committee established an
        annual statement pilot program for life and annuity and property/casualty companies. Today, the vast majority of the states participate in MCAS and the NAIC collects the data on behalf of the states.
      • (2) - Other line-specific indicators are used to determine, for example, the number of policy exchanges and resisted claims for life insurance policies.
      • Complaints
        • The efficient use of a complaint analysis system allows an insurance department to create an effective and immediate surveillance program by detecting potential problems on both individual company and industry-wide levels. This complaint information is used by the states as an early warning system to detect problems and to provide a basis for further market conduct review. However, despite the obvious correlations between consumer complaints and market conduct concerns, regulators must be careful not to jump to conclusions purely on the basis of complaint data, nor should they conclude that the absence of complaints means an absence of market problems. There are a number of reasons why an exclusive focus on consumer complaints cannot be used as a substitute for a more thorough inquiry into the company’s activities, including:
          • Some markets are inherently more prone to complaints than others. For example, this is likely to be true for the higher risk or non-standard sector within any line of insurance. Such differences must be taken into account before trying to compare the performance of different companies serving different markets. When there are problems with life insurance products, they are less likely to become visible through the consumer complaint process. Similarly, complaints are more likely in lines of business where consumers have more frequent interactions with their insurer, such as health or private passenger auto, regardless of how serious the potential problems might be.
          • ⇒  Nevertheless, complaint information is still the single most useful source of currently available data for market analysis. Complaints provide a great deal of information about the industry, individual insurers, and real-time consumer concerns, including emerging issues in the marketplace.
        • Life Insurance
          • The coverage structure and company finances for life insurers are notably different from other types of insurance. Proportionately, market conduct problems with life companies are more likely to arise on the sales side and less likely to arise on the claims side than in other lines of insurance. In life insurance, there is significantly less interaction between the company and the consumer over the course of a customer relationship than with other lines of insurance. Market conduct problems are often less likely to surface promptly in the form of a consumer complaint.
    • 2021 0319 - NAIC - MAPWG - Market Analysis Procedures (D) Working Group - Virtual Meeting (in lieu of meeting at the 2021 Fall National Meeting) - 3p
      • 2. Adopted Revisions to the MCAS Best Practices Guide Ms. Rebholz said during the Working Group’s last meeting, it discussed the completion of the MCAS Best Practices Guide...
  • 2017 0105 - Presentation - CEJ, Birny Birnbaum / FACI to - ? - 45p
  • 2017 0811 - Letter - ACLI to NAIC (MCASWG) - 4p
    • 6. [There is] a problem with CEJ categories. [Some companies] sell whole life
      insurance and market it as final expense. [Others] file policies as individual whole
      life with the corresponding mortality table. How [a company] markets product
      should be irrelevant.
  • 2017 1113 - Letter - ACLI to NAIC (MCASWG) - 4p
  • [] - 2017 0413 - CEJ - 4/13/17 re 16 New Life & Annuity Categories
  • [] - 2017 0927 - CEJ - See Center for Economic Justice (CEJ) Response Letter 9/27/17 
  • 2017 1020 - MCAS - NAIC - Letter - ACLI - NAIC Market Conduct Annual Statement Blanks (D) Working Group - RE: Center for Economic Justice Proposal 4/13/17 re 16 New Life & Annuity Categories - 4p
  • [  ]  - 2017 1108 - MCAS - NAIC - Letter - ACLI - NAIC Market Conduct Annual Statement Blanks (D) Working Group
  • 2017 1117 - MCAS - NAIC - Letter - ACLI (ML) - NAIC Market Conduct Annual Statement Blanks (D) Working Group - 4p
    • 3. MCAS data is only one component regulators can use to identify potential
      trends. A key resource already exists with the regulators’ handling of
      consumer complaints—often the fastest way to learn of potential market
      conduct concerns while also gaining detailed insight regarding the specific
      nature of such concerns.
    • For the reasons and supporting information provided above and in the ACLI letters of 8/11/17, 10/20/17 and 11/8/17, the ACLI opposes the proposed expansion of product categories for which data elements would be collected for the Life & Annuity Market Conduct Annual Statement
  • 2018 - NAIC-?- Survey  -  Life and Annuity MCAS Usage Survey - 23p
  • 2019 0822 - MAPWG - NAIC - ACLI - RE: Consider Adoption of Disability Insurance MCAS Proposed Scorecard Ratios - 4p
    • To: NAIC - John Haworth, Chair (WA)
    • From: ACLI - Michael Lovendusky
  • 2019 0826 - Letter - CEJ, Birny to NAIC (MCASWG) - 6p
  • 2019 0830 - NAIC - LIIIWG, Life Insurance Illustrations Issues Working Group - Letter - Birny Birnbaum (CEJ) - 12p - BN
  • 2020 0304 - Letter - ACLI to NAIC (MCAS) - Market Conduct Annual Statement Blanks (D) Working Group - 2p
  • 2020 0512 - Letter - ACLI to NAIC (MCAS) - Market Conduct Annual Statement Blanks (D) Working Group - RE: MCAS New Life Insurance & Annuities Lines - 3p
    • To: NAIC - Rebecca Rebholz, WI, Chairwoman, October Nickel, ID, Vice Chairwoman
      Market Conduct Annual Statement Blanks (D) Working Group
    • From: ACLI - David Leifer, Rikki Pelta
  • 2020 0518 - Letter - CEJ, Birny Birnbaum to NAIC - Market Conduct Annual Statement Blanks Working Group - re: Proposed Revisions to Life, Annuity, Auto and Homeowners MCAS Reporting - 7p
  • 2020 0525 - Letter - CEJ, Birny Birnbaum to NAIC - Market Conduct Annual Statement Blanks Working Group - 7p
  • 2020 0821 - Letter - ACLI to NAIC (MCAS) - Market Conduct Annual Statement Blanks (D) Working Group - 3p
  • 2020 0824 - Letter - CEJ, Birny Birnbaum to NAIC - NAIC Market Conduct Annual Statement Blanks Working Group - 4p
    • CEJ writes to respond to industry comments – the 8/19/21 NAMIC/APCIA letter
      regarding the new data element “Closed Claim Without Payment Below the Deductible” and the ACLI 8/21/20 letter regarding additional reporting of accelerated underwriting and TPAs/MGAs.
  • 2020 0924 - Letter - ACLI to NAIC (MCAS) - Market Conduct Annual Statement Blanks (D) Working Group - 3p
  • 2020 1020 - Letter - ACLI to NAIC (MCAS) - Market Conduct Annual Statement Blanks (D) Working Group - 7p
  • 2021 0421 - CEJ, Birny Birnbaum - Review of NAIC Market Conduct Analysis Statement Data in April 2, 2021 Letter from FLOIR to Chairman Ingoglia - 7p
  • 2021 0527 - Letter - CEJ, Birny Birnbaum to NAIC - NAIC Market Conduct Annual Statement Blanks Working Group - Regarding the proposed Digital Claims Settlement Additions for Private Passenger Auto and Homeowners MCASs and Accelerated Underwriting Additions for Life MCAS - 5p
  • 2021 0526 - Letter - CEJ, Birny Birnbaum to NAIC - NAIC Market Conduct Annual Statement Blanks Working Group - Regarding the proposed Digital Claims Settlement Additions for Private Passenger Auto and Homeowners MCASs and Accelerated Underwriting Additions for Life MCAS - 3p
  • 2021 0811 -  Letter - CEJ, Birny Birnbaum to NAIC (LIAC) - Response to Questions Regarding the Work of the Life Insurance Illustrations WG - 16p
  • 2009 - GAO - Insurance Reciprocity and Uniformity: NAIC and State Regulators Have Made Progress in Producer Licensing, Product Approval, and Market Conduct Regulation, but Challenges Remain - gao.gov/products/gao-09-372  - Full Report - 57p
  • 2017 0105 - Presentation - CEJ, Birny Birnbaum / FACI to - ? - 45p
  • 2017 0811 - Letter - ACLI to NAIC (MCASWG) - 4p
  • 2017 1113 - Letter - ACLI to NAIC (MCASWG) - 4p
  • [] -  CEJ - 4/13/17 re 16 New Life & Annuity Categories
  • [] - CEJ - See Center for Economic Justice (CEJ) Response Letter 9/27/17 
  • 2017 1020 - Letter - ACLI to NAIC - NAIC Market Conduct Annual Statement Blanks (D) Working Group - RE: Center for Economic Justice Proposal 4/13/17 re 16 New Life & Annuity Categories - 4p
  • 2018 - Survey - NAIC-? -  Life and Annuity MCAS Usage Survey - 23p
  • 2019 0822 - Letter - ACLI to NAIC, MAPWG - RE: Consider Adoption of Disability Insurance MCAS Proposed Scorecard Ratios - 4p
    • To: NAIC - John Haworth, Chair (WA)
    • From: ACLI - Michael Lovendusky
  • 2019 0826 - Letter - CEJ, Birny to NAIC (MCASWG) - 6p
  • 2019 0830 - NAIC - LIIIWG, Life Insurance Illustrations Issues Working Group - Letter - Birny Birnbaum (CEJ) - 12p - BN
  • 2020 0304 - Letter - ACLI to NAIC (MCAS) - Market Conduct Annual Statement Blanks (D) Working Group - 2p
  • 2020 0512 - Letter - ACLI to NAIC (MCAS) - Market Conduct Annual Statement Blanks (D) Working Group - RE: MCAS New Life Insurance & Annuities Lines - 3p
    • To: NAIC - Rebecca Rebholz, WI, Chairwoman, October Nickel, ID, Vice Chairwoman
      Market Conduct Annual Statement Blanks (D) Working Group
    • From: ACLI - David Leifer, Rikki Pelta
  • 2020 0518 - Letter - CEJ, Birny Birnbaum to NAIC - Market Conduct Annual Statement Blanks Working Group - re: Proposed Revisions to Life, Annuity, Auto and Homeowners MCAS Reporting - 7p
  • 2020 0525 - Letter - CEJ, Birny Birnbaum to NAIC - Market Conduct Annual Statement Blanks Working Group - 7p
  • 2020 0821 - Letter - ACLI to NAIC (MCAS) - Market Conduct Annual Statement Blanks (D) Working Group - 3p
  • 2020 0824 - Letter - CEJ, Birny Birnbaum to NAIC - NAIC Market Conduct Annual Statement Blanks Working Group - 4p
    • CEJ writes to respond to industry comments – the 8/19/21 NAMIC/APCIA letter
      regarding the new data element “Closed Claim Without Payment Below the Deductible” and the ACLI 8/21/20 letter regarding additional reporting of accelerated underwriting and TPAs/MGAs.
  • 2020 0924 - Letter - ACLI to NAIC (MCAS) - Market Conduct Annual Statement Blanks (D) Working Group - 3p
  • 2020 1020 - Letter - ACLI to NAIC (MCAS) - Market Conduct Annual Statement Blanks (D) Working Group - 7p
  • 2021 0527 - Letter - CEJ, Birny Birnbaum to NAIC - NAIC Market Conduct Annual Statement Blanks Working Group - Regarding the proposed Digital Claims Settlement Additions for Private Passenger Auto and Homeowners MCASs and Accelerated Underwriting Additions for Life MCAS - 5p
  • 2021 0526 - Letter - CEJ, Birny Birnbaum to NAIC - NAIC Market Conduct Annual Statement Blanks Working Group - Regarding the proposed Digital Claims Settlement Additions for Private Passenger Auto and Homeowners MCASs and Accelerated Underwriting Additions for Life MCAS - 3p
  • 2021 0811 -  Letter - CEJ, Birny Birnbaum to NAIC (LIAC) - Response to Questions Regarding the Work of the Life Insurance Illustrations WG - 16p
  • NAIC has created market conduct data collection and analysis tools, but efforts to collect market conduct data from insurers face challenges. '
    • To improve data collection, NAIC developed the Market Conduct Annual Statement (MCAS), which began first as a pilot project in 2002 and became permanent in 2004.
    • MCAS is a data collection instrument designed to help state insurance regulators better understand insurers’ conduct in the marketplace, identify problem areas, and use information to target market conduct responses and examinations.
    • The information collected includes....
  • p49 - Individual and Group Life Product Data Elements

2009 - GAO - Insurance Reciprocity and Uniformity: NAIC and State Regulators Have Made Progress in Producer Licensing, Product Approval, and Market Conduct Regulation, but Challenges Remain - gao.gov/products/gao-09-372  - Full Report - 57p

  • 2018 - Survey - NAIC-? -  Life and Annuity MCAS Usage Survey - 23p
    • Q2;
      • Universal Life - 14, Individual Equity Indexed Life Insurance  - 11 - [Bonk: ]
      • We recommend further discussion. We see value in being able to separate preneed contracts and other types of life insurance contracts. We would point out that these categories are not mutually exclusive. For instance, equity indexed universal life insurance is likely a subset of universal life insurance and could be reported under both lines. We need to make sure these are defined so that there is no double counting.
        • [Bonk: Who is "We?"]
    • Q7 - Do you supplement the Life MCAS analysis with any internal
      information or data, such as consumer complaints, market share reports,
      etc.?
    • Q8 - Do you supplement your Life MCAS analysis with any external information/data, such as data calls made by the department? Note: the reference to data calls does not include data calls or requests for information that are submitted during a market conduct examination.
      • 3 -  yes, we will look at external complaint bulletin boards, producer blogs, class action litigation bulletin boards and other info
      • 9 - A.M. Best reports, company websites, news articles
    •  
  • 2020 0518 - Letter - CEJ, Birny Birnbaum to NAIC - Market Conduct Annual Statement Blanks Working Group - re: Proposed Revisions to Life, Annuity, Auto and Homeowners MCAS Reporting - 7p
    • p3 - More Granular Lines of Business for Life Insurance and Annuities 
    • p4 - ACLI Proposal Not Serious or Useful - The ACLI proposes, in its May 12, 2020 letter that...
      • p5 - Third, ACLI convenient leaves out other product markets that have been the source of market problems, including indexed universal life, fails to distinguish products within the stated groups and fails to identify new, complex products like buffered annuities. 
    • p6 - Additional Data Elements – Lawsuits – Auto, Home, Life and Annuity
      • The most recent MCAS lines of business – private flood, disability, long-term care,
        lender-placed – include five data elements for suits:

        • 1. Number of lawsuits open at beginning of the period
        • 2. Number of lawsuits opened during the period
        • 3. Number of lawsuits closed during the period
        • 4. Number of lawsuits closed during the period with consideration for the consumer
        • 5. Number of lawsuits open at end of period
      • The current private passenger auto and homeowners MCASs include data elements 1, 2, 3 and 5, but not data element 4.
      • ⇒  The current life and annuity MCAS s contain no data elements for lawsuits.
  • I just sat in on the MCAS review of recent changes, I didn’t post a question because I was afraid of going down a rabbit hole.
    • I have a lot of questions about the lawsuit considerations, especially for the life line of business.  (p6)
  • As a regulator I would like to gain a better understanding as to what we are attempting to gather and accomplish. (p6)

--  Tennessee Department of Commerce and Insurance -  Shelli Isiminger, Insurance Examiner 3

2020 0930 - NAIC - MARKET CONDUCT ANNUAL STATEMENT BLANKS (D) WORKING GROUP - 14p

  • 2019 0822 - MAPWG - NAIC - Letter - ACLI - RE: Consider Adoption of Disability Insurance MCAS Proposed Scorecard Ratios - 4p
    • ACLI - Michael Lovendusky
    • RE: Consider Adoption of Disability Insurance MCAS Proposed Scorecard Ratios
    • Insight regarding the NAIC process in this area is welcomed.
    • Ratio #7: The percentage of lawsuits closed with consideration for the consumer. More insight regarding this ratio is desired. What will this ratio measure and what value or insight will be derived? The “number of lawsuits closed with consideration for consumer” is not a measure of wrong-doing or fault on the part of insurer. On the contrary, some litigation efforts result in a good-will settlement to limit a company’s exposure to negative publicity even when the carrier had no wrong-doing. Other litigation matters may be settled due to economic interests—a balancing of the cost of continued litigation with the cost of settling the claim (with payment in whole or in part). Litigation that results in consideration for the consumer does not equate to, nor correlate with, carrier malfeasance. For this reason, any data obtained from such a ratio would be both misleading and irrelevant in ascertaining a carrier’s level of compliance with insurance regulations or its adherence to contract provisions. Such erroneous information could lead to increased frivolous litigation. This ratio should be omitted.
    • The ACLI respectfully observes that proceeding in a manner where evaluation of the Ratios has illuminated errors in the Definitions but then marched in combination to market, likely will lead to data collections and analyses which might be useless at best, and possibly even misleading.
    • The new system created a mechanism automatically spotting company practices anomalous to generally acceptable market conduct. Regulators could then efficiently focus examination upon the anomalous company practices.
    • The MCAS was first built to collect and analyze data on lines of insurance business which are mandated by law to be purchased by consumers.
      • Mandated insurances have heightened consumer protection considerations because they are mandated.
      • Mandated insurance coverages have statutory requirements standardizing the coverage for all consumers enabling meaningful data collection, analyses and identification of anomalous behavior by MCAS.
    • The ACLI is concerned that non-mandated, lines of insurance, such as life and disability income, may not fit within the MCAS mechanism.
      • Because these lines are sold, not bought, the products and product management are not standardized.
      • Data collection about them might be useful or it might generate numerous false positives.
      • If numerous false positives are generated from MCAS data elements, definitions or ratios, they will mislead regulators to examine companies for statistical anomalies which are anomalous because they relate to non-standardized products or product managements.
      • At some point the wisdom of cost-benefit analysis of including the life insurance line in MCAS arises.