MCASWG – Market Conduct Annual Statement Blanks Working Group – (D) – NAIC

MCASWG - Market Conduct Annual Statement Blanks Working Group - D - NAIC

content.naic.org/cmte_d_mcaswg.htm
- 2016-Current (as of 2023) -?

2017 0105 - Presentation - CEJ, Birny Birnbaum / FACI to - ? - 45p
2017 0811 - NAIC - MCASWG - Letter - ACLI - 4p
- The CEJ Fails to Justify or Support Any New Data Collection
- 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.
- 10.Under the NCOIL Market Conduct Annual Statement Model Act, the Commissioner is permitted to collect data for the purpose of market analysis. Section 8 of the NCOIL Model Act provides that the MCAS Data, the work papers and any analysis, as well as the review and analysis of MCAS Data by the Commissioner, among other reviews and analysis by other governmental entities, is confidential and privileged. With the exception of very limited sharing provisions outlined in Section 9, the sharing of MCAS Data with the public is prohibited.
- 11. The CEJ appears to be a consumer advocacy group focusing on ensuring regulators not only recognize the interests of consumers but also act to further those interests (http://www.cej-online.org/whoweare.php). It is our understanding that the MCAS Data submitted to the states is not intended nor is it allowed to be disseminated to the public. The CEJ’s argues that the changes will be more useful; useful for whom? Not necessarily the consumer. There are other resources for the consumer such as A.M. Best, Standard & Poor’s, and J.D. Power to name a few. Also, an insurer’s complaint and market conduct examination information is generally available to the consumer through the DOI’s website.
- 13. In general, would be painful to make this change and report at this level of detail, but ultimately doable. Two primary sources of pain: First, certain system changes would have to be made to accommodate the expansion from four to 16 categories. This means time and money. Second, we currently do not break out VL or UL products, so reporting on these means manual work (these products are coded either as VL or UL).
- 19. I would add that the cost to the NAIC would outweigh the benefit since they would have to change the score card ratios and current tools and at the end come up with the same conclusion as if they had only four lines of business.
2017 1113 - NAIC - MCASWG - Letter - ACLI - 4p
[ ] - 2017 0417 - 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 - NAIC - MCASWG - Letter - ACLI - RE: Center for Economic Justice Proposal 4/13/17 re 16 New Life & Annuity Categories - 4p
2018 - MCASWG - NAIC - Life and Annuity MCAS Usage Survey - 23p
2019 0822 - NAIC - MAPWG - Letter - ACLI - RE: Consider Adoption of Disability Insurance MCAS Proposed Scorecard Ratios - 4p
- To: NAIC - John Haworth, Chair (WA)
- From: ACLI - Michael Lovendusky
2019 0826 - MAPWG - NAIC - Letter - CEJ, Birny Birnbaum - 6p
- Finally, not content to obstruct Disability MCAS ratios, ACLI concludes its diatribe by arguing that MCAS isn’t needed for life insurance and annuities, based on a false history of the purpose and development of MCAS. Clearly, these comments are not appropriate and must not be considered by the MAP WG.
2019 0830 - NAIC - LIIIWG - Life Insurance Illustrations Issues Working Group - Letter - Birny Birnbaum (CEJ) - 12p - BN
[ ] - 2019 1023 - ⁱComments of the Center for Economic Justice to the Market Conduct Annual Statement Working Group re Proposed Updates to the Life & Annuity MCAS Blanks (10/23/19).

2020 0304 - MCASWG - NAIC - Letter - ACLI - 2p
- The ACLI is evaluating proposals to add new lines in the MCAS. The ACLI contributes the following to help distinguish Final Expense from Preneed life insurance:
2020 0512 - NAIC - MCASWG - Letter - ACLI - 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
- The ACLI deliberated on how best to approach the addition of new life insurance and annuity lines to the Market Conduct Annual Statement (MCAS). It considered four approaches
  - Center for Economic Justice proposalsⁱ
  - NAIC Regulator Survey Findings - [2018 - MCASWG - NAIC - Life and Annuity MCAS Usage Survey - 23p]
  - Interstate Insurance Compact Standard Lines
  - NAIC Financial Statement Lines of Businessⁱⁱ
  - ⁱComments of the Center for Economic Justice to the Market Conduct Annual Statement Working Group re Proposed Updates to the Life & Annuity MCAS Blanks (10/23/19).
  - ⁱⁱ The 2019 NAIC Financial Statement Lines of Business for life insurance and annuities were:
    - Life Group and Individual: Industrial Life, Whole Life, Term Life, Indexed Life, Universal Life, Universal Life with Secondary Guarantees, Variable Life, Variable Universal Life, Credit Life, Other Individual Life
- The ACLI concluded to respect the NAIC Regulator Survey Findings as a practical and systematic way to add new Life Insurance and Annuity lines of business to the MCAS.
- The ACLI believes the following four categories are the most useful for regulators and all interested parties:
  - The number of complaints received by regulators
  - The number of complaints received by the insurance company
  - The number of policy or contract surrenders with charges
  - The number of policy or contract surrenders without charges
- ACLI observes that, while there might be more granular data of interest for each line which perhaps might be justifiably requested, it might be desirable to establish a presumption against gathering additional data, at least initially.
  - This is because: (1) additional data imposes additional costs and administrative burdens on each insurance company and (2) more granular data may mislead regulators into misapprehending a company’s market or business operation.
- With regard to the latter concern, the ACLI came to realize in its evaluation of the Disability Income interrogatories and ratios that companies may focus on a market segment, administer policies or contracts in tailored ways or have a business operation which distinguishes it from other companies but not in ways which should be considered suspicious or problematic. This may be especially true for smaller lines of business with fewer companies participating in the market (though it might also be true for companies competing in a larger, competitive markets).
2020 0518 - NAIC - MCASWG - Letter - CEJ, Birny Birnbaum to NAIC - re: Proposed Revisions to Life, Annuity, Auto and Homeowners MCAS Reporting - 7p
2020 0520 - MCASWG -
- During the last subject matter expert (SME) call, in which possible edits to the Life and Annuity MCAS were discussed, participants were asked to review the survey responses in detail and bring back their top three selections for changes to the next meeting.
- Mr. Bridgeland noted that he has reviewed this and looked at what information can be gathered by consumers, academics and consumer organizations.
  - ... he wants to note that because of changes over the years, there is a gap in data available to state insurance regulators and consumers.
- b. The next item of discussion was Individual Universal Life Insurance and Individual Variable Universal Life Insurance.
  - There was no interest from the Working Group or any state insurance regulators to segregate Universal Life products.
  - Mr. Birnbaum noted that for most of these product lines, there is a different market and a different target population. There have been different types of market problems associated with that. If you look at traditional universal life, there have been problems with companies that promise vanishing premium, and now consumers are being faced with extraordinary premium. With indexed universal life (IUL), there is a different set of issues with unrealistic or misleading illustrations or hidden fees. If you aggregate all of this into cash value products, there is no way to distinguish what is happening with whole life versus universal life versus IUL versus variable life; as a result, the market analysis is ineffective.
- Ms. Nickel then asked for comments on Individual Variable Universal life. Mr. Birnbaum noted that he believes there should be a break-out here as well. She asked if there was a motion to make any changes to the Individual Universal Life and individual variable universal life, and there were none.
- d. The next topic discussed was Individual Equity Indexed Life Insurance products. There were no comments from Working Group members, other state insurance regulators, or interested parties with an interest to break this product line out, so no motions were made to make changes here.
- The next item discussed was whether there is an interest in separating Individual Whole Life Insurance and Individual Variable Life Insurance.
- Ms. Nickel noted that the next item of discussion is regarding comments received on surrenders.
- h. Ms. Nickel noted that the next item to discuss is the Individual Cash Value Policies related to nonforfeiture.
- j. The next item discussed was for a comment received that stated the following: “We find that most companies do not have comments about being a potential outlier because they do not have any basis for comparison to state and national averages at the time of their filing.”
  - Ms. Nickel noted that the score cards are available for everyone to review, including insurance companies and consumers; and even at an individual state level, carriers have the ability to review where they fall and review trends over periods of time to determine what kind of outliers they may have. She asked if anyone else had comments. Mr. Haworth noted that he believes this is more of an educational comment, as he has had to assist various parties by showing them the tools available to find information on potential outliers.
- Ms. Nickel noted that the final comment regarding the Life MCAS interrogatories supports the incorporation of illustration certification fields. She asked that Working Group members interested in this topic provide further clarification on this request by email to Randy Helder (NAIC) or other NAIC staff to get a better idea of what is being asked for.
- m. The next item discussed was the proposal from the CEJ. Mr. Birnbaum has suggested edits to the MCAS related to lawsuit questions that are asked within the Life, Annuity, Home and Auto MCAS blanks. His suggestion is to make the lawsuit questions consistent across all lines of business. The current life and annuity lines of business do not contain information related to lawsuits. The other lines of business include the number of lawsuits open as of the end of the period, the number of lawsuits open as of the beginning of the period, the number of lawsuits opened during the period, and the number of lawsuits closed during the period in total. With exception of Homeowner and Private Passenger Auto, the other lines also include a data element to collect the number of lawsuits closed during the period with consideration for the consumer. It needs to be determined whether lawsuit data collection is an addition that should be made to the Life MCAS Blank.
  - Mr. Birnbaum noted that all MCAS blank lines have data elements related to lawsuits except life and annuity, and all recent MCAS blanks have five lawsuit data elements: 1) the number of lawsuits open at the beginning of the period; 2) the number of lawsuits opened during the period; 3) the number of lawsuits closed during the period; 4) the number of lawsuits closed during the period with consideration for the consumer; and 5) the number of lawsuits open at the end of the period. He suggested that these data elements be added to the life blanks. Ms. Nickel made a motion, seconded by Mr. Arnold, to add these lawsuit elements to the life MCAS. The motion passed unanimously.
- n. Ms. Nickel noted that Mr. Birnbaum has also suggested new data elements to address accelerated life underwriting. With accelerated life underwriting, insurers use credit scores, facial analytics, and other non-medical data to underwrite applicants and price policies.
  - David Leifer (ACLI) asked if there is a definition of accelerated underwriting that would be used.
  - Mr. Birnbaum noted that this is extremely relevant data, and some life insurers started using accelerated underwriting as far
    back as 2008. The practice has been growing exponentially with the pandemic due to less human to human interactions.
    Accelerated underwriting is using algorithms and third-party non-medical data to replicate the traditional results of traditional underwriting. Mr. Birnbaum noted that this has profound implications on both sales and consumer outcomes. Being able to look at the difference in consumer outcomes between traditional underwriting practices and accelerated underwriting is meaningful to state insurance regulators to understand the cause of these differences.
    - The CEJ suggests that the concept of accelerated underwriting be adopted and the CEJ proposal be exposed for comments because
      there has not been much engagement from industry to date as far as what they would suggest in the way of definitions.
      - Industry representatives can then provide feedback, and changes can be made.
  - Peter Kochenburger (University of Connecticut School of Law) noted that it would be useful to collect this data, not only for the states individually, but also for state insurance regulators to see and understand what is happening on a national level.
2020 0525 - NAIC - MCASWG - Letter - CEJ, Birny Birnbaum to NAIC - 7p
2020 0624 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 36p
2020 0821 - MCASWG - NAIC - Letter - ACLI - 3p
- MCAS is Not the Appropriate Avenue or Tool to Collect Information in Support of the Dialogue
  - Of primary concern to ACLI is the potential inclusion of an “accelerated underwriting” definition as well as accelerated underwriting (AUW) interrogatories and data elements in MCAS.
    - ACLI strongly believes AUW is the future of life insurance underwriting and that is why we encourage the NAIC to continue to approach the issue in a measured, unified way.
  - First, there is no settled definition of accelerated underwriting at this time, and the definition offered by the consumer groups does not help clarify the issue.
  - Second, we fail to see how this is an appropriate topic for MCAS. The purpose of MCAS is to assess company risk from a perspective of comparison. Factors such as adverse changes in complaint ratios can indeed indicate the possible need for heightened regulator action. The purpose of MCAS is not to engage in generalized data collection about the insurance industry which is not useful for benchmarking purposes.
    - There are no consumer complaint trends to analyze, nor any other worthwhile outcome to be obtained.
    - Additional confusion could also arise if states treat underwriting variables differently.
  - Third, it should be borne in mind that any MCAS data collection of underwriting information may raise sensitivity issues with respect to trade secret and competitiveness issues. Regulators of course have the authority to review underwriting practices in the course of market conduct examinations. However, the disclosure of these practices is done under the controlled process of regulatory examinations with a view towards confidentiality. From this perspective ACLI questions whether underwriting information is appropriate for MCAS collection.
  - [Bonk: More]
  - TPAs and MGAs - We also question the usefulness of collecting information concerning MGAs and TPAs. Insurers are ultimately responsible for the actions of these entities, who can provide a wide variety of services.
2020 0824 - NAIC - MCASWG - Letter - CEJ, Birny Birnbaum - 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 0826 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 14p
- 6. Discussed the Addition of Accelerated Underwriting Definition and Data Elements to the Life MCAS
  - Ms. Rebholz noted that the original suggestion from the CEJ to add data elements related to accelerated underwriting was included in the meeting materials. During the national meeting, there seemed to be some interest in the addition of data elements in this area. Comments were received on this topic from the ACLI, the CEJ and October Nickel (ID).
    - Mr. Leifer noted that the ACLI does not think the MCAS is the right place to gather data for accelerated underwriting or data related to it, at least right now. He is not sure how accelerated underwriting fits in to what the MCAS is for, as he understands it to be a benchmark for consumer complaints and litigation.
    - Ms. Arp noted that she spoke with her actuary, and they believe these definitions and what is being collected here needs more attention based on what they are learning in other workstreams. She asked if the definitions as written are overbroad and if there is a better way to capture something unique for the market concern focused on here.
2020 0924 - NAIC - MCASWG - Letter - ACLI - 3p
- An Alternative Approach
  - If the Working Group is intent on gathering life insurer AUW information at this time, we offer two further suggestions, in addition to conversations with insurers. First, ACLI recommends using the Academy of Actuaries definition of AUW which reads: “a technology solution which is designed to perform all or some of the screening functions traditionally completed by underwriters, and thus seeks to reduce the manpower, time and/or data necessary to underwrite a life insurance application.” This definition has the advantage of being vetted by experts who have worked with and studied AUW. Second, we strongly urge the Working Group to limit the questions to the first two in the CEJ proposal—is a company using AUW and, and if so for which lines of business. This may provide some baseline information without collecting source data, which again will be of little utility for regulators to use in this form.
2020 0930 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 14p
- (p6) - Shelli Isiminger (Tennessee Department of Commerce and Insurance) - MCAS Life/Annuity Lawsuit Considerations
  - 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.
  - Interpleader, Consumer, Consideration,
  - Are their specific types of lawsuits that are being targeted? There are lawsuits that can take many, many years to settle.
  - As a regulator I would like to gain a better understanding as to what we are attempting to gather and accomplish.
    - As a former industry member who worked with the claims legal department handling litigation and the person who formerly reported on MCAS claims data, I believe additional clarification will be needed so that the industry will report accurately.
2020 1020 - NAIC - MCASWG - Letter - ACLI - 7p
- ACLI has summarized the important workstreams the NAIC is currently undertaking surrounding AUW in the table below to highlight the ample and complex work that is already underway. ACLI urges the Working Group to consider all of these ongoing discussions and workstreams at the NAIC prior to making any changes to MCAS
2020 1028 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 5p
2020 1103 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 6p
2020 1116 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 8p
2021 0420 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 6p
2021 0526 - NAIC - MCASWG - Letter - CEJ, Birny Birnbaum to NAIC - Regarding the proposed Digital Claims Settlement Additions for Private Passenger Auto and Homeowners MCASs and Accelerated Underwriting Additions for Life MCAS - 3p
- Free Look,
- Background
  - Back in the Spring of 2020, CEJ responded to the working group’s request for suggestions and proposals for amendments to existing MCAS lines of business. Part of our response were the proposals to add data elements for digital claims settlement to private passenger auto and homeowners and accelerated underwriting for life insurance. Our proposals were motivated by the consumer concerns about and the work being done at the NAIC on big data and artificial intelligence (AI) – specifically, insurers’ use of new data sources and algorithms to speed up or replace traditional methods of pricing, claims settlement and antifraud. In the case of digital claims settlement, the new data are from photos taken by the consumer, drones or other aircraft and from vehicle and property-generated devices and analyzed without involvement of a human appraiser to produce a claim settlement.
2021 0527 - NAIC - MCASWG - Letter - CEJ, Birny Birnbaum to NAIC - Regarding the proposed Digital Claims Settlement Additions for Private Passenger Auto and Homeowners MCASs and Accelerated Underwriting Additions for Life MCAS - 5p
2021 0621 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 26p
2021 0719 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 5p
2021 0811 - NAIC - LIIIWG - Letter - CEJ, Birny Birnbaum to NAIC (LIAC) - Response to Questions Regarding the Work of the Life Insurance Illustrations WG - 16p
2022 0309 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 14p
2022 0516 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 31p
2022 0526 - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group
- 2. Adopted the Life MCAS Edits for AU
2022 0719 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 8p
2022 0812 - NAIC - d committee - 30p
2022 0908 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 7p
2022 1013 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 8p
2023 0414- Letter - CEJ, Birny to NAIC (Accelerated Underwriting (A) Working Group) -
Regarding Draft “Regulatory Guidance and Considerations” - 19p
2023 0510 - NAIC - MCASWG - Market Conduct Annual Statement Blanks (D) Working Group - 16p