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Market Conduct Reform: The Good, The Bad, The Ugly

Market Conduct Reform: The Good, The Bad, The Ugly. ACLI Compliance and Legal Section Annual Meeting July 22, 2009. MCAS Milestones: 2002. Pilot Program Announced Market Analysis Working Group – Sept 2002 Purpose Uniform system of collecting market related information

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Market Conduct Reform: The Good, The Bad, The Ugly

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  1. Market Conduct Reform:The Good, The Bad, The Ugly ACLI Compliance and Legal Section Annual Meeting July 22, 2009

  2. MCAS Milestones: 2002 • Pilot Program Announced Market Analysis Working Group – Sept 2002 • Purpose • Uniform system of collecting market related information • Promote uniform analysis from state to state • Consistent measures allows companies to be compared on an equal basis in a given state • 9 Participating States • Submission Due Date December 31, 2002 • Data Collection From 1/1/02 to 6/30/02 MCAS: ACLI Compliance/Legal Section Annual Meeting 1

  3. Replacements Applied For 1035 Exchanges Full And Partial Surrenders New Policy Loans Exceeding 25% Of Maximum Loan Value Death Claims, Paid, Received, Denied, Resisted, Compromised Complaints – Consumer And DOI Direct Premium Written Issued Policies In Force Policies Or Certificates Amounts Issued Amounts In Force MCAS Milestones: 2002 (Cont’d) Data Collected 8 Schedules Individual Cash Value Products Group Cash Value Products Individual Non-Cash Value Products Group Non-Cash Value Products Individual Fixed Annuities Group Fixed Annuities Individual Variable Annuities Group Variable Annuities MCAS: ACLI Compliance/Legal Section Annual Meeting 2

  4. MCAS Milestones: 2003 • Industry Invited To Participate In Open Dialogue – Facilitated By ACLI • Discussions Resulted In Changes To Data Requirements And Submission Date • Ohio Served As Data Collection Point; Then Distributed To Appropriate State • Submission Made Under Market Conduct Protections Of Participating States • Changes Made To Data Requirements • Reduced schedules from 8 to 5 • Deleted 2 measures/questions • Added 1 measures/questions • Changed 2 measures/questions MCAS: ACLI Compliance/Legal Section Annual Meeting 3

  5. MCAS Milestones: 2003 (Cont’d) • 8 Participating States • Submission due date April 30, 2004 • Data collection from 1/1/2003 – 12/31/2003 • ACLI Survey -- Number Of Hours Required To Respond • Requirement of programming work • Manual data retrieval/review • Receiving data from third parties • Number of person hours for each step MCAS: ACLI Compliance/Legal Section Annual Meeting 4

  6. MCAS Milestones: 2004 – 2006 • 2004 • Adopted process to introduce changes to the report and addition of new states • Changes to be made by 08/01 • New states required to declare by 9/1 of year prior to which data is to be collected • 12 participating states • Submission date June 30, 2005 • Data collection 1/1/2004 – 12/31/2004 • No changes to data requirements • 2005 • 15 participating states • Definitions changes • 2006 • 17 participating states • Centralized call letter – December 2006 MCAS: ACLI Compliance/Legal Section Annual Meeting 5

  7. MCAS Milestones: 2007 • “Dark Cloud On The Horizon” -- Ohio Declares It Can No Longer Support Data Collection And Distribution • 3 NAIC Task Force Teams Developed To Study: • Aggregate annual statement • Uniform process for analysis • Process for adoption of elements • June 2007 • 22 participating states • Certification for MCAS data adopted for 2008 submission • Premium threshold for participation established as $50,000 aggregate for life premiums and annuity considerations – all schedules required MCAS: ACLI Compliance/Legal Section Annual Meeting 6

  8. MCAS Milestones: 2008 • 4/18/2008 – Proposal Market Regulation And Consumer Affairs (D) Committee • Establish a separate annual financial statement exhibit for submission of MCAS data • Set may 1st as the annual filing date • Authorize NAIC to receive, store, analyze data and distribute results • Industry Response • Concerns with confidentiality of data • Concern about inconsistency of results and conclusions; need for common data dictionary • Shift in focus from market analysis to consumer protection • 25 Participating States MCAS: ACLI Compliance/Legal Section Annual Meeting 7

  9. MCAS Milestones: 2009 • 29 Participating States • NAIC Serves As Central Collection Point • Task Force Created To Explore Remaining Issues: • 2 regulators • 2 industry representatives • 2 consumer representatives • $50,000 Premium Threshold Applied To Either Life Or Annuity Products • Not required to report product line that does not meet threshold MCAS: ACLI Compliance/Legal Section Annual Meeting 8

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