IIAA Urges State Reforms to Boost Speed-to-Market
The Independent Insurance Agents of America (IIAA) told Congress that independent agents are committed to finding a solution to the speed-to-market issue that balances the demands of competition, free enterprise and product innovation with consumer protection.
At a hearing on Capitol Hill, the Financial Services Committee’s Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee explored what state regulators are doing to speed up the new insurance product approval process. The hearing was called by subcommittee chairman Rep. Richard Baker (R-La). IIAA submitted written testimony.
According to the IIAA, the manner in which insurance rates and policy forms are approved and regulated can differ dramatically from state to state and from one insurance line to the next. It often takes two years or more to obtain regulatory approval to launch a new insurance product on a national basis. Typically, it takes just a few months for bank products to gain approvals and be introduced into the market.
To remedy the speed-to-market issue, IIAA offered a number of solutions that state regulators should adopt:
• Review and Elimination of Unnecessary Requirements — States should identify and eliminate regulations that do not offer meaningful consumer protections or add regulatory value. Also, states should review whether formal approval is necessary for all products and forms.
• Quicker Response Times — States should act promptly on filings and reduce information for filing reviews. Other options include a single point of filing for new products, a “fast-track” filing system for forms, a flexible rating systems, or a self-certification process for certain products.
• Identifying Uniform Standards — States should develop and adopt uniform standards for product and rate filings, and streamline approval processes. The development of filing submission checklists will assist insurers in submitting complete filings and decrease the time required by regulators to review filings. Also, regulatory review checklists will help ensure that regulators’ deviations from statutory and regulatory review requirements only occur in unique situations.
• Transparent Review Processes — States should be required to fully and clearly articulate the reasons for a denial so a company can identify potential filing problems and correct flaws.
• Greater Use of Technology — States should implement filing procedures that use telephones, faxes and e-mail. This would increase filing efficiency and reduce the time it takes to have simple questions answered. States also should consider posting sample forms or filing checklists on their Web sites for companies to use when submitting product rate filings. Lastly, states should be encouraged to provide reports on their web sites summarizing why filings were disapproved.
IIAA Vice President of Federal Government Affairs Maria L. Berthoud notes that the National Association of Insurance Commissioners (NAIC) is engaged in a review of state product approval processes. The NAIC’s Speed to Market Working Group has identified numerous ways to improve the multi-state system.
In addition to the working group, the NAIC also has formed the Coordinated Advertising, Rate, and Form Review Authority (CARFRA), a pilot program in which 10 state insurance departments are working cooperatively to identify best practices, including those that may be legislatively implemented for greater uniformity of filing and review procedures, and to increase the efficiencies, expertise, and transparency applied to the review process.