Property

1
Property
Financial Program
Casualty
2006
Compliance
Market Conduct Examinations
Conference
David Moskowitz Assistant Chief Examiner Market
Conduct Financial Analysis and
Examinations Financial Program
Texas Department
of Insurance
2
Property
Topics of Discussion
Casualty
2006
Compliance
Conference
Financial Program Market Conduct Division Why
Market Regulation? Statutory Authority Types and
Triggers for Market Conduct Examinations Focus of
Current Market Conduct Examinations Chapter 751,
TIC Market Analysis Support of NAIC
Activities Questions?
Texas Department
of Insurance
3
Property
Financial Program
Casualty
2006
Compliance
Conference
Texas Department
of Insurance
4
Property
Market Conduct
Casualty
2006
Compliance
Conference
Texas Department
of Insurance
5
Property
Why Market Regulation
Casualty
2006
Compliance
Conference
The basic tenet of market regulation is to
protect consumers by identifying and correcting
insurer operating practices that are in conflict
with contract provisions, state laws, rules,
regulations, or orders of the Commissioner.
Texas Department
of Insurance
6
Property
Statutory Authority
Casualty
2006
Compliance

• Established by the 70th Texas Legislature in 1988

Conference
Texas Statutes Similar to those of other states
in that several NAIC model laws have been
adopted Many other regulations unique to Texas
Texas statutes take precedence If Texas law
is not available, the NAIC procedures are followed
Texas Department
of Insurance
7
Property
Statutory Authority continued
Casualty
2006
Compliance
Texas Insurance Code
Conference

• Market Conduct Surveillance Act, Chapter 751,
  effective 9/1/05
• Establishes framework for department market
  conduct actions, including
• Process and Systems for identifying, assessing,
  and prioritizing market conduct problems that
  have a substantial adverse impact on consumers,
  policyholders, and claimants
• Development of appropriate market conduct
  actions by the Commissioner as required to
• Substantiate market conduct problems, and
• Remedy significant market conduct problems
• Procedures to communicate and coordinate market
  conduct actions with other states

Texas Department
of Insurance
8
Property
Statutory Authority continued
Casualty
2006
Compliance
Texas Insurance Code
Conference

• Regulation of Professionals, Title 13
• Uninsured or Underinsured Motorist Coverage
  Personal Injury Protection Coverage, Articles
  5.06-1 and 5.06-3
• Rates and Forms for Certain Property and Casualty
  Insurance, Article 5.13-2
• Practices Relating to Declination, Cancellation,
  and Non- renewal of Insurance Policies, Chapter
  551
• Processing and Settlement of Claims, Chapter 542
• Credit Scoring and Credit Information, Chapter
  559
• Financing of Insurance premiums, Chapter 651

Texas Department
of Insurance
9
Property
Statutory Authority continued
Casualty
2006
Compliance
Texas Administrative Code
Conference

• Property and Casualty Insurance, Chapter 5
• Agents Licensing, Chapter 19
• Unfair Competition and Unfair Practices of
  Insurers, and Misrepresentation of Policies,
  Chapter 21
• Insurance Premium Finance, Chapter 25

Texas Department
of Insurance
10
Property
Types and Triggers for Market Conduct Exams
Casualty
2006
Compliance
Conference
Types of Market Conduct Examinations

• Insurance Companies
• Premium Finance Companies
• Managing General Agents
• Local Recording Agents
• HMOs/PPOs

Texas Department
of Insurance
11
Property
Types and Triggers for Market Conduct Exams
continued
Casualty
2006
Compliance
Conference
Triggers for Market Conduct Examinations

• Market Analysis
• Complaints
• Financial Examinations
• Referrals from other TDI Activities
• Current Issues

Texas Department
of Insurance
12
Property
Focus of Current Market Conduct Examinations
Casualty
2006
Compliance
Conference

• Race-Based Premiums
• Hurricane Rita
• Workers Compensation

Texas Department
of Insurance
13
Property
Chapter 751, TIC
Casualty
2006
Compliance
Impact of Chapter 751 on Market Conduct Exams
Conference

• Market Analysis
• Market Conduct Actions
• Examinations
• Sanctions

Texas Department
of Insurance
14
Property
Market Analysis
Casualty
2006
Compliance
What is Market Analysis
Conference
A structured and formalized system of
collecting and analyzing data and other
information to enable regulators to identify
general market disruptions and important market
conduct problems, while maintaining an efficient
and effective regulatory framework.
Texas Department
of Insurance
15
Property
Market Analysis continued
Casualty
2006
Compliance
Texas Market Analysis
Conference

• Incorporated NAIC Market Regulation Handbook
  into the Texas Policy and Procedures Manual
• Developed structured and formalized system of
  collecting and analyzing data
• identify market disruptions
• identify market conduct problems
• Developed an electronic prioritization program
  to standardize baseline analysis factors
• Developed procedures for conducting market
  analysis

Texas Department
of Insurance
16
Property
Support of NAIC Activities
Casualty
2006
Compliance
Conference

• Market Regulation Handbook
• Participate in the Market Analysis Working Group
  (MAWG)
• Collaboration with other States

Texas Department
of Insurance
17
Property
Questions
Casualty
2006
Compliance
Conference
Texas Department
of Insurance