National Association of Insurance Commissioners

NAIC: How We Use Insurer Compliant DataTrish Schoettger

NAIC Sr. Manager

NAIC: How We Use Insurer Compliant Data

NAIC – History & BackgroundNAIC – History & Background

State Insurance Regulatory ObjectivesState Insurance Regulatory Objectives

How NAIC Supports the States How NAIC Supports the States

Collecting Data Collecting Data

NAIC: How We Use Insurer Compliant Data

Why NAIC Collects the DataWhy NAIC Collects the Data

How States Use the DataHow States Use the Data

Keeping the Data ConfidentialKeeping the Data Confidential

How You Can Participate in the Process How You Can Participate in the Process

NAIC History & BackgroundA Tradition of Consumer Protection –

• Formed in 1871

• Voluntary organization of chief insurance regulatory officials from the 50 states, District of Columbia and five U.S. territories

• Created to address the need to coordinate regulation of multi state insurers.

• Assists the state’s in their primary objective – protecting consumers and ensuring the safety and soundness of insurance companies operating in the United States.

Market Conduct Analysis

Consumer Assistance & Education

Fraud Investigation & Enforcement

State Insurance Regulatory Objectives

License/ Approve

Market Regulation/Consumer

Affairs

Financial Solvency

GovernmentAffairs

Company Certificate of Authority

Producer/Agent Licensing

Rate & Form Product Approval

Financial Analysis & Exams

Statutory Accounting & Reporting

Receivership – Rehab or Liquidation

State Accreditation Program

Coordinate w/Fed Reg

State Legislators – NCSL, NCOIL

International Relations - IAIS

How NAIC Supports the States• Membership Services

– Education & Training– Meeting Planning

• Financial Regulatory Services

• Securities Valuation

• Market Regulatory Services

• Legal/Model Laws

• Research/Library Services

• Information Systems

• Insurance Products and Services• Government Relations

www.naic.org

How NAIC Supports the States• Membership Services

– Education & Training– Meeting Planning

• Financial Regulatory Services

• Securities Valuation

• Market Regulatory Services

• Legal/Model Laws

• Research/Library Services

• Information Systems

• Insurance Products and Services• Government Relations

www.naic.org

Why NAIC Collects Data

1980’s – Regulator Goal to Improve Financial Solvency Surveillance of all Insurance Companies

– Simplify Compliance for Insurance Companies

– Modernize the Financial Reporting process by Collecting Data Electronically

– Reduce Cost of Regulatory Compliance for Companies

– Provide Regulators in every State, Easy Access to Timely, Accurate Insurance Company Financial Data

Why NAIC Collects Data

FDR: Financial Data Repository

– Simplify compliance for insurance companies

• Adopted one uniform company filing specification standard

– Modernize the financial reporting process

• NAIC provides the secure network infrastructure for companies to file electronically via the Internet

– Reduce Cost of Regulatory Compliance

• Company can prepare and file their financial statement once, and comply with statutory filing requirements in all 56 jurisdictions

Why NAIC Collects DataFDR: Financial Data Repository

• Provide Regulators in every State, Easy Access to Timely, Accurate Insurance Company Financial Data

– Collect & Publish in 24 hours –

• company filing of 57,500 data elements loaded and data validated against 16,638 crosschecks within 24 hrs.

– Worlds Largest Insurance Database –

• 5,000+ company filings aggregated, independently reviewed and supporting calculations added (i.e., RBC, IRIS Ratios) – 280 gig data,

– Immediate, On-line Access for 12,000+ Regulators –

• all State Insurance Departments, regardless of size, staff experience, or budget can begin monitoring insurance company financial solvency

• Formats – PDF, XML, Excel, HTML

• Tools – Scoring, Profiles, Exam Prep

– Recent study estimated cost $3 - $13 million, per state, to replicate FDR

Why NAIC Collects Data

SimplifySimplify ModernizeModernize Reduce CostsReduce Costs

•Uniform Standard•Uniform Standard •Make Electronic•Make Electronic •Submit once, comply all states

•Submit once, comply all states

•Build once, used by all states

•Build once, used by all states•Streamline•Streamline

Collecting Data

LicenseApprove

SPLD - Producer Licensing

UCAA - Company Licensing

SERFF – Rate & Form Product Filing

FDR – Financial Data Repository

AVS, ISIS - Securities Valuation

GRID – Global Receivership Info

CDS – Complaint Database

RIRS – Regulatory Actions

MAP – Market Analysis Profile

FinancialSolvency

Market Regulation

ConsumerAffairs

CIS – Consumer Information Source

OFRS – Online Fraud Reporting System

How States Use the Data• Make Company Licensing Decisions

• Make Producer/Agent Licensing Decisions

• Make Rate & Form Approval Decisions

• Conduct Company Solvency Surveillance

• Prepare for Market/Financial Examinations

• Evaluate Insurance Company Investment Portfolio

• Track Company Receiverships

• Track Trends in Consumer Complaints

• Monitor Marketplace, Conduct Investigations

Keeping the Data Confidential• Legal

– Maintain Confidentiality Agreements with States

• Information Technology Infrastructure

– Maintain $6 million data center and network

– Provide a Private Frame-Relay Telecommunications Network with the States

– Follow Industry Security Standards and Procedures

• Maintain Adequate Firewalls

• Encrypt Confidential Data

• Conduct System Security Design Reviews

How You Can Participate in the Process

ImplementDatabase

NAICCommittee Open

Meetings

H Committee

ReviewNAICBudget

NAIC Database

New Database Process

Identifies regulatory needPolicy and database developed during open meetings

Reviewed by Information Resources Mgmt (H) Cmte to ensure alignment with overall regulatory strategic plan

Proposal vetted thru budget process, (includes public budget hearing)

REGULATORY

INTERNET

NAIC Business Model

Technical Architectureas of February 1, 2005

T-1's

Research StatisticalReports SAS Database

I-SITEMarket Regulation

I-SITEFinancial Database

(FDR)

FirewallFirewall

State Dept ofInsurance

NAIC InternetRouter

NAICFrame Relay

InsuranceConsumer

ConsumerInformation

Source (CIS)

NIPR ProducerDatabase (PDB)

www.naic.org

NAIC OfficeNew York

NAIC OfficeWashington, D.C.

$

Federal Regulator

Global Receivership(GRID)

ClaimNet

I-SITEState Producer

Licensing Database(SPLD)

Securities Valuation(ISIS)

Company Licensing(UCAA)

InsuranceIndustry Customer Authorized

Business Partners

Internet Filing -Financial Annual

StatementFilings

Rates & FormFiling

(SERFF)

* Planned

NIPRAppointment &Terminations

DMZ

NAICEnterpriseNetworkInterstate

CompactProduct

Regulation*

NIPRResident &

Non-ResidentLicensing

CONSUMER/INDUSTRY

Frame RelayCommunications

Router

NationalPortal

Online FraudReportingSystem(OFRS)

State BasedSystems

(SBS)

Market ContinuumTracking System