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© 2013 National Association of Insurance Commissioners

SPEED TO MARKET (EX) TASK FORCE

Speed to Market (EX) Task Force Aug. 24, 2013, Minutes

Commercial Lines (EX) Working Group Aug. 23, 2013, Minutes (Attachment One)

Commercial Lines (EX) Working Group Jun. 25, 2013 Minutes (Attachment Two)

Report of the Operational Efficiencies (EX) Working Group (Attachment Three)

Report from the IIPRC (Attachment Four)

W:\National Meetings\2013\Summer\TF\Speed\Contents.doc

© 2013 National Association of Insurance Commissioners 1

Draft: 9/3/13

Speed to Market (EX) Task Force

Indianapolis, IN

August 24, 2013

The Speed to Market (EX) Task Force met in Indianapolis, IN, Aug. 24, 2013. The following Task Force members

participated: Scott J. Kipper, Chair (NV); Dave Jones represented by Joel Laucher (CA); William P. White represented by

Robert Nkojo (DC); Karen Weldin Stewart represented by Gene Reed (DE); Andrew Boron represented by Bruce Sartain

(IL); Sharon P. Clark represented by Frank Goins (KY); Eric A. Cioppa represented by Mary Hooper (ME); Mike Rothman

represented by Tammy Lohmann (MN); Wayne Goodwin represented by Ted Hamby (NC); Mary Taylor represented by

Maureen Motter (OH); John D. Doak represented by Denise Engle (OK); Laura N. Cali (OR); Todd E. Kiser represented by

Tracy Klausmeier (UT); Jacqueline K. Cunningham represented by Mary Bannister (VA); and Mike Kreidler represented by

Lee Barclay (WA).

1. Received the Report of the Commercial Lines (EX) Working Group

Mr. Barclay reported that the Working Group has initiated a review of industry concerns compiled by the American

Insurance Association (AIA) and the Property Casualty Insurers Association of America (PCI). Included in this review was a

compilation of charts from the NAIC’s Compendium of State Laws on Insurance Topics related to the states’ rate filing

requirements and exemptions. Filing review and approval times, as well as the criteria for measuring those time periods, for

filings submitted through the SERFF system were discussed and are under further review. The Working Group discussed a

draft survey of the states intended to obtain filing review and approval durations for commercial lines rates and forms.

(Attachments One and Two).

2. Adopted the Report of the Operational Efficiencies (EX) Working Group

Ms. Motter reported that the Working Group has completed its review of, and adopted proposed modifications to, the

Uniform Life, Accident & Health, Annuity and Credit Product Coding Matrix and the Uniform Property & Casualty Product

Coding Matrix by e-vote. Changes to the life, health and annuity version of the matrix include adding a “Contingent

Deferred” subtype under “Group Annuities – Special and Group Annuities – Individual” . Changes to the property/casualty

version of the matrix were modifications of the descriptive language in the “Annual Statement Line” column to accurately

reflect that premiums and losses may be reported on either annual statement line 2.1 or line 2.3, depending on whether the

product is or is not federally reinsured. With this solution, regardless of whether the premiums and losses are reported on the

annual statement line 2.1 or line 2.3, the product would continue to be submitted for review under subtypes of insurance

(Sub-TOIs) 02.3001 Commercial Flood or 02.3002 Personal Flood. The language in the “Annual Statement Line” column

now reads “02.3 or 02.1.”

Mr. Barclay made a motion, seconded by Ms. Lohmann to adopt the report and the recommended changes to the product

coding matrices (Attachment Three). The motion was unanimously adopted.

3. Received an Update on the Federal Patient Protection and Affordable Care Act (PPACA)

Julie Fritz (NAIC) stated that a large portion of the SERFF Plan Management initiative is now complete and the remaining

portion of the project will be implemented in late 2013 and early 2014. Milestones reached since the Spring National

Meeting:

Tested and implemented the upload of URAC and National Committee for Quality Assurance (NCQA) file transfers

for accreditation data.

Continued communication and collaboration efforts with staff from the U.S. Center for Consumer Information and

Insurance Oversight (CCIIO) to minimize duplicative efforts, both in the development process and the software

solutions for the health insurance marketplaces.

Participated in weekly or biweekly meetings with state-based marketplace (SBM) and partnership-like marketplace

states to keep them informed of implementation tasks.

Continued development and testing of CCIIO financial management data transfers related to the qualified health

plan (QHP) submissions.

Trained and implemented the U.S. Office of Personnel Management (OPM) on its use of SERFF to move multi-state

QHPs to the state and then the federal marketplace.


Worked with the U.S. Centers for Medicare & Medicaid Services (CMS)/Office of Information Services (OIS) to

resolve validation issues with the federal templates.

Completed the CMS security review for SERFF Plan Management.

Undertook a small user acceptance testing project for SERFF Plan Management.

Released SERFF v6.1, which provides limited PDF Pipeline functionality.

Completed a state implementation project to prepare state configuration in SERFF for QHP submissions.

Completed SERFF Plan Management training for the industry and the states.

Supported the states and issuers throughout the plan submission process beginning in mid-April.

Completed development of services to transfer plan data to the marketplaces, both federal and state-based.

Completed implementation of OPM instances in SERFF for the submission and transfer of multi-state plans.

Supported the states and issuers through the federal transfer plan process beginning the week of July 22.

Ms. Fritz reported that further work will be focused on final plan transfers to SBM states, definition of requirements for

renewals and recertifications and the transfer of financial management data in preparation for open enrollment.

4. Received an Update on Other SERFF Activity

Bridget Kieras (NAIC) reported that, through July 2013, filing volumes in SERFF increased, particularly due to health filings

related to the PPACA. Overall, filing volume exceeded budget by 58,536 transactions. NAIC staff is also working on

application server upgrades and the implementation of NetIQ, which will replace existing security software.

Ms. Kieras also reported that two enhancements for IIPRC were introduced during the past few months were completed.

These were modifications designed to ease the annual registration process, as well as the ability to import templates on

submitted filings.

Ms. Fritz provided the Task Force with an overview of a public access implementation plan related to the 2012 adoption of

an initiative to leverage SERFF to meet the states’ public access needs. Ms. Fritz reported that the project is projected to

begin in December 2013 and complete in August 2014. The project objectives are to:

Provide states with a mechanism, which is optional, to allow public Internet access to their SERFF filings.

Enhance SERFF to allow for public access to Plan Management Binders.

Prevent adverse impact to SERFF performance and stability.

Maintain existing public access and Health Filing Access Interface (HFAI) business rules and functionality.

Support “walk-up” traffic, as well as support the states’ needs for larger volume requests.

The current design for this project leverages some existing concepts and functionality, including the current Pipeline, public

access and Health Filing Access Interface business rules and code. These features will be evaluated and, where beneficial,

portions will be refactored to ensure the system can support the increased usage expected when the public access interface is

released. Significant hardware purchases are not anticipated, but existing third-party software will need to be updated and

more database storage might be necessary.

The project cost is estimated to be $75,350 for consulting and $31,500 for the purchase of an iText server license. There were

no objections to proceeding with the project as proposed.

5. Received a Report from the SERFF Board

Commissioner Kipper reported that the NAIC Executive (EX) Committee will be considering adoption of SERFF Advisory

Board Operating Procedures and the dissolution of the current SERFF Board during its Aug. 25 meeting.

6. Received a Report from the IIPRC

Karen Schutter (IIPRC) reported that Arkansas (effective Aug. 14, 2013) and Montana (effective Oct. 1, 2013) have passed

legislation and will soon be participating in the IIPRC. Nevada will be opting back in to the individual long-term care

uniform standards. Florida enacted legislation that is a non-standard version of Compact legislation, and the Florida Office of

Insurance Regulation must prepare and submit a report by Jan. 1, 2014 that examines the extent to which the IIPRC uniform

standards provide consumer protections equivalent to those under Florida law for Compact products.


Ms. Schutter said the IIPRC is undergoing a five-year review of most individual life uniform standards, all of which is

available on the IIPRC docket. The IIPRC has 164 registered companies as of the end of July 2013, but new companies

continue to register. Nearly 450 products have been approved in 2013 and the total volume by year end is expected to exceed

2012 experience (Attachment Four).

7. Heard a Report from the Federal Housing and Finance Agency (FHFA)

Jim Gray (Federal Housing and Finance Agency—FHFA) reported that changes in mortgage insurance requirements were

being made and an influx of related product filings is expected. The FHFA is developing a checklist template to ease the

review process for state insurance regulators. The checklist can be provided as part of the SERFF filing submission.

Having no further business, the Speed to Market (EX) Task Force adjourned.

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Attachment One


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Draft: 9/10/13

Commercial Lines (EX) Working Group

Indianapolis, IN

August 23, 2013

The Commercial Lines (EX) Working Group of the Speed to Market (EX) Task Force met in Indianapolis, IN, Aug. 23,

2013. The following Working Group members participated: Lee Barclay, Chair (WA); Sarah McNair-Grove (AK); Jim

Newins (KS); Joan Dutill and Angela Nelson (MO); Paula Pallozzi (RI); and Don Beatty (VA). Also participating was:

Denise Engle (OK).

1. Adopted its June 25 Minutes

Upon a motion by Ms. Nelson and a second by Ms. McNair-Grove, the Working Group adopted its June 25 minutes

(Attachment ).

2. Discussed Compilation of Industry Concerns

Mr. Barclay said that, during the June 25 conference call, the Working Group requested trade representatives to provide the

group with a list of specific industry concerns. The American Insurance Association (AIA), the National Association of

Mutual Insurance Companies (NAMIC) and the Property Casualty Insurers Association of America (PCI) provided a

preliminary inventory of the industry concerns regarding commercial lines.

Lisa Brown (AIA) said it is important that insurers be able to quickly offer products and services that meet the needs of the

commercial lines market. Otherwise, the businesses may elect to use less regulated, non-insurance options, such as the

surplus lines market. Particularly with specialty lines, companies will offer a product on a surplus lines basis to avoid lengthy

delays and expenses associated with the 50-state filing and approval process. Multi-state policies are of specific concern, as

the states have required companies to make multiple filings to get approval for the same form. Aside from the burden and

extra cost, this can lead to two different outcomes in the approval process, where one reviewer approves the form, while

another does not. Insurers often find they must underwrite based on the “most restrictive” state where coverage is being

offered. This does not necessarily provide for the best business opportunities for insureds. The alternative is to write multiple

policies for a single policyholder or to carve out particular categories of loss. These solutions are usually impractical or leave

the insured with potential coverage gaps. Some of the states have provided guidance on how to handle multi-state risks, while

others do not. It can be confusing for the insurers and policyholders.

David Snyder (PCI) said the regulation of commercial lines forms costs the loss of an estimated $18.3 billion in annual

premium to the traditional insurer market, and companies are interested in working with regulators to find a solution to bring

policies back into the regulated market. The ability of foreign reinsurers to do business in the U.S. has been liberalized

through amendments to the Credit for Reinsurance Model Law (#785). It is, therefore, particularly important to review U.S.

laws and supervisory practices to make sure that there are not unproductive burdens on domestic reinsurers. With the new

emphasis on group supervision and reporting, it is important to clearly set forth group supervisory responsibilities in the U.S.

system to avoid multiple reporting and other new obligations on insurers, many of which would be imposed on commercial

insurers.

Mr. Snyder said approval times vary significantly on a state-by-state basis, and sometimes by many months. While this

creates the risk of the customer opting for a more responsive alternative risk transfer mechanism, it could particularly be a

problem when there is a need for urgency, such as with terrorism risk filings. The System for Electronic Rate and Form

Filing (SERFF) has improved efficiency, but there are still significant inconsistencies with regard to follow-up questions

from the states. These inconsistencies, sometimes asking nearly the same question in different ways, partly offset the

efficiency gains from SERFF. Before insurers submit filings, it would be helpful for the states to identify changes in their

laws so that insurers can readily comply. A more uniform approach to modernization across the states would benefit carriers

and sophisticated commercial insureds. Products could be brought more quickly to market and insureds would be able to

obtain coverage that is specific to their particular needs. He suggested a more uniform standard for informational filing

requirements and that any prior approval filing requirements for manuscript forms should be eliminated.

Ms. Pallozzi said Rhode Island distributes a legislative bulletin once a year with law changes and update instructions via

SERFF, and asked by what mechanisms companies are looking to be informed of regulatory changes. Mr. Snyder said a

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company had researched law changes on their own, made a filing and had the filing kicked back to them. Ms. Brown added

that highlighting the changes within SERFF is usually helpful. Ms. Pallozzi said regulatory changes, and their effective date,

are usually provided within SERFF. Ms. Nelson said Missouri sends email distributions through the SERFF system.

Mr. Barclay said the states often give a formal notice of legislation changes and can also send an email distribution through

SERFF.

Ms. Nelson asked whether manuscript filings are more of an issue in the states with a prior-approval process versus a file-

and-use process. She said that, in Missouri, there is a 10-day file-and-use process. Ms. Brown said that, by definition,

manuscript policies cannot be written in advance, and a policyholder is waiting, unprotected, for the policy to go through. Mr.

Snyder added that there is also an issue of conflicting state responses, so it is better to have a clearer definition regarding the

use of manuscripts from the states.

With respect to multi-state policies, Mr. Barclay asked whether any guidance by a single state currently offered is preferred

over another. Ms. Brown said she would have to go back to the AIA membership to ask if companies have a preference,

although any guidance is preferred over no guidance. Mr. Barclay said the Washington state insurance code applies to any

subject of insurance and encouraged the industry representatives to focus on process improvement. He asked if the trade

organizations could identify reinsurers that have been required to submit excess filings. Mr. Snyder said he would collect that

information and provide it to the Working Group.

Birny Birnbaum (Center for Economic Justice—CEJ) asked about the purpose of the Working Group and said deregulation is

not the solution. If there are differences because of state-based regulation, it is because the needs of the states differ. All of

the states agreeing on uniform filing requirements, with the highest consumer protection, is a simple solution. He suggested

that the Working Group look at the definition of a commercial lines product and refine it to a more granular level, so that

products that are ultimately paid for by the consumer, like lender-placed insurance, are not exempt from the filing review

process. Mr. Birnbaum requested the Working Group not listen to anecdotes about issues the companies are facing, but rather

document common, prevalent issues. He suggested looking into an interstate compact, similar to the Interstate Insurance

Product Regulation Commission (IIPRC), for commercial lines products, which produces high consumer protection with the

uniformity that the industry requests. Lowering requirements in the admitted market will only encourage the lowering of

requirements in nonadmitted markets.

Ms. Engle said the insurance industry is failing to meet the needs of business consumers with the problems with lack of

diversity in products in the marketplace and agreed a compact similar to the IIPRC could help with redundancy.

Mike O’Malley (Chubb) agreed the IIPRC would be good to reference, but there still needs to be uniform rules. He asked

whether different state exposures are really different and suggested that the Working Group look at what customers need and

why there are different rules. If the admitted market is robust, the independent agent will not seek the surplus lines market,

but if there are more hoops to jump through, the agent will seek out the surplus lines market. Mr. Beatty said it is good to

have examples of issues the companies have, so that the Working Group can more readily examine the problems.

3. Reviewed a Compilation of Compendium Charts

Sara Juliff (NAIC) said that, per the Working Group’s adopted work plan, she compiled two charts from the Compendium of

State Laws on Insurance Topics (Compendium). Chart II-PA-10, “Rate Filing Methods for Property/Casualty Insurance,

Workers’ Compensation, Title,” and chart II-PC-20, “Property and Casualty Commercial Lines Re-engineering,” have been

combined to show existing filing methods and exemptions. For the purposes of condensing information, in both charts, legal

citations have been removed, and, in chart II-PA-10, the comment column has been removed and any specific information for

“personal” or “private” insurance was removed. Any line without specific mention of “personal” or “private” insurance was

left in the compilation. Any missing or outdated information can be sought out via a state survey. She said the information is

current as of 2012.

Mr. Barclay said outdated information could be updated in a survey. Ms. Nelson asked whether there is a chart for form filing

methods, similar to the rate filing method chart, in the Compendium. Ms. Juliff said there is currently no Compendium chart

for property/casualty form filing methods. However, the commercial lines exemption chart, II-PC-20, does cover rate and

form filing exemptions.

Attachment One


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4. Reviewed Available SERFF Information

Ms. Juliff said she met with SERFF staff to discuss current information collected through their system. And, it seems that, to

narrow the search to commercial lines, sub-types of insurance will need to be pulled into the search. She said that producing

average approval times via SERFF might simply be a matter of the Working Group agreeing on the criteria to use to define

the beginning and ending of a filing. A commonly generated report created by the SERFF team uses the “start date” (or date

submitted to the states) and the latest closing “disposition date” (or date of the state’s final decision). While there may be

issues with distinguishing between rates, forms and rules, it appears that SERFF can indeed create approval time reports and

the Working Group need only determine its preferred criteria.

Bridget Kieras (NAIC) said that, for the most part, the states use the response letter and objection letter tools within SERFF,

but the reopening of filings can cause an issue in determining turnaround time. She said SERFF can generate a report for the

Working Group to review. Mr. Barclay requested that NAIC staff compile a report for the Working Group to review.

Ms. Pallozzi suggested looking at the report generated for commissioners. Ms. Kieras said that report is not as granular as

what the Working Group is looking for, as it would not differentiate between the types of insurance, but it could definitely be

something to reference.

Mr. Birnbaum said turnaround time is not necessarily an indication of relaxed regulation, as some of the states might take 30

days to do a thorough review, but the states with less staff, and that are, therefore, unable to perform a thorough review,

might only take 15 days to review a filing. It also might take longer for detailed reviews of disorderly filings and less time for

organized filings. Some metric regarding the quality of the filings received by the states might be needed in conjunction with

approval times. Mr. Birnbaum asked if filings in SERFF are reviewed differently depending on the type of insurance under

which it is filed. Mr. Barclay said the Working Group realizes approval time is only one method of measurement and the

group will need to look at other sources to derive a more complete picture.

5. Discussed Draft Survey to the States

Ms. Juliff said that, in the Working Group’s first and third charges, a state survey is suggested to collect missing or updated

information from the Compendium chart compilation, as well as to question the states on their recent commercial lines

regulation, where “recent” is defined as the past five years. The Working Group will need to decide on questions for the

survey, a deadline for the responses and whether the Working Group needs to have a 100% response rate. She suggested the

Working Group review the information presented during the meeting and later discuss specific questions over email or

possibly during a conference call. Ms. Juliff said the survey can include any additional information the group is interested in,

such as how the states review their filings within SERFF, and if the review differs by type of insurance. Mr. Barclay invited

members and any interested parties to submit possible survey questions to Ms. Juliff by Sept. 23.

Mr. Beatty asked what type of missing information the Working Group would be looking for. Mr. Barclay said the survey

would be intended to collect recent activity in the states regarding commercial lines and to update old information and to add

information not included within the Compendium charts, such as form filing methods, and that the Working Group would not

ask general, open-ended questions. Ms. Pallozzi asked whether the Compendium is the starting point for the survey. Mr.

Barclay said it is one of the starting points, but will not encompass the whole picture. Joe Bieniek (First Consulting &

Administration, Inc.) offered assistance to review and update state laws via the Regulatory and Legislative Interest Group

Committee of the Chartered Property Casualty Underwriter (CPCU) Society.

Having no further business, the Commercial Lines (EX) Working Group adjourned.

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Attachment Two


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Draft: 7/5/13

Commercial Lines (EX) Working Group

Conference Call

June 25, 2013

The Commercial Lines (EX) Working Group of the Speed to Market (EX) Task Force met via conference call June 25, 2013.

The following Working Group members participated: Lee Barclay, Chair (WA); Michael Ricker (AK); George Bradner (CT);

Jim Newins (KS); Joan Dutill and Angela Nelson (MO); and Mary Branum, Joanne Scott, Rebecca Nichols and John Hunter

(VA). Also participating were: Joel Laucher (CA); and Sandra Starnes (FL).

1. Discussed Industry Comments on How States Could Improve the Filing and Approval Process

Paul Tetrault (National Association of Mutual Insurance Companies—NAMIC) presented NAMIC’s comment letter and said

the comments were primarily high level and supportive of regulatory modernization. He added that there was a lot of

progress in the late ’90s, but there was a loss of momentum. The current situation sees some states that lowered their

thresholds for rate and form filing requirements, while other states may not have lowered requirements as significantly. Even

in states where legislation was passed, it is not as effective as other states. He said re-examining the issue could benefit

commercial lines insureds, insurance companies and state regulators.

Lisa Brown (American Insurance Association—AIA) presented AIA’s comment letter and said reforms are extremely

important now, given the need for insurers to be able to innovate quickly and react to market changes in the economy. She

said restrictions, in some states, constrain the innovation that insurers are pursuing. She said AIA strongly advocates for

states, which have not already done so, to move toward a file-and-use or informational filings for forms, and possibly rates.

AIA cautioned against the 1988 NAIC white paper Regulatory Re-engineering of Commercial Lines Insurance, which likens

small businesses to personal lines insureds. She said she would not want to see a two-tiered system. She suggested looking to

states that have made changes, such as Florida or New York, to begin the Working Group’s effort.

Rita Nowak (Property Casualty Insurers Association of America—PCI) gave support for the AIA and NAMIC comment

letters and said there is currently a patchwork quilt of reform as a result of the work from the late ’90s. Another issue is

insureds and companies struggling with how to handle multiple-state policies. She suggested looking to Nebraska, which has

identified the role of a “home state” that will control the forms, which seems to be where the headquarters of the company are

located. She explained that if a company has a branch in Nebraska, but is headquartered in Illinois, Illinois’ cancellation and

renewal policies would dictate procedure. She said more states need to look at how best to deal with multiple-state policies

from a control perspective.

Mr. Barclay said an issue with multiple-state policies is dealing with not just sections of each state insurance code that deal

with rate and form review. Often times there may be a scope section for the entire code that deals with all subjects of

insurance, which may require an exception be carved out to prevent it from becoming more complicated. He said there was

some truth in the comparison of small-business owners being similar to personal lines consumers, as some do not have a

specialized knowledge of insurance and sometimes need to be treated similarly to regular consumers. Ms. Brown said the

concept of every small-business owner being the same is inaccurate, and not all owners should be lumped together. Some

businesses owners—organizations made up of a very few number of people—are very sophisticated in their knowledge of

business contracts, and would have the same ability to negotiate a manuscript insurance policy as a risk officer in a very large

company. She said not to draw an arbitrary line between what is a sophisticated vs. unsophisticated commercial policyholder.

The categorization should be between commercial and personal policyholders, just as individuals working in the insurance

industry do not receive special treatment over regular consumers.

Mr. Barclay said there has been a lot of innovation on the rates side, with predictive modeling used in personal lines and

increasingly in commercial lines, and he asked what kind of innovations, on the forms side, are being slowed down by the

state regulation process. He said in Washington, forms go through a lot faster than rates do. Ms. Brown said a lot of emerging

industries have to turn to specialty lines and surplus lines to get the coverage they need because, as the admitted market is

trying to come up with products to address their needs, the approval process may not be quick enough for them to get

immediate coverage. Therefore, those industries have to turn to a surplus lines market and it may take time to get them back

into admitted market.

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Ms. Scott asked why industry members are hesitant to go to state legislatures to push changes they would like to see, as

everything industry has requested will require law changes. She said industry members have proposed law changes in the

past and there seemed to be reluctance to go forward. Mr. Tetrault said industry looks to the NAIC as an entity that promotes

uniformity and consistency. The industry has no reluctance and has been very active in a few states, such as Florida and New

York. He said if the NAIC takes an action, like developing a model law or guideline, it can promote the cause when industry

goes state by state. Mr. Bradner said most states have a law in their books which allows the commissioner to exempt certain

commercial rates, forms, and rules from review. He said it would be interesting to see which states have such laws and

whether states without such a provision, where it is more difficult to submit forms and rates, should consider adopting one.

Ms. Nelson said Missouri does not have such a provision and no discretion is given to exempt any filings, rates, rules, or

forms based on group classification or type. Mr. Barclay noted the difference between exempting certain lines of business

from review versus exempting certain lines from filing. States may have provisions in their statutes to allow exemptions in

both cases, but it needs to be clear which the Working Group is talking about. Mr. Brander added that Connecticut has a

statute that allows for both exemptions. Though Connecticut still requires the companies to file the necessary items, they are

handled on an audit basis rather than being reviewed for certain lines of business. Ms. Nowak said in the late ’90s when the

industry approached state legislatures, it was critical for state departments’ participation. The industry wants the state

departments’ support and wants to understand the regulatory point of view. Going straight to the legislature without working

with the state departments is not an appropriate way to make changes. She said the industry looks at approaching the

legislature as a partnership type of action plan.

Bob Hunter (Consumer Federation of America) said regulation to protect small business is essential, as essential as regulation

to protect individual consumers. He said prior approval works to protect consumers, and the position issued in the 1988 white

paper is still true today. Policy forms need to be fair and clear, prices need to be regulated, and more regulation is needed for

larger businesses. He said the Working Group should maintain the large business/small business distinction and require

special regulation of large businesses, such as with forced-placed insurance.

Nancy Stepanski (Westmont Associates, Inc.) said there are a number of states that have adopted commercial lines or large

risk exemptions based on a multitude of criteria, varying from state to state. She asked how those exemptions are working in

those states. Mr. Barclay said Washington has such exemptions, and since the rates and forms of the policies are not required

to be filed, it is hard to determine how many there are in total. Washington made an effort in previous years to survey

companies to determine how the exemptions were working, and a few regulators visited companies to see what kind of

documentation the companies were keeping on the rates. He said the Washington regulation states that rates do not have to be

filed, but dictated documentation must be kept in how those rates were developed and be available for the commissioner’s

review. Ms. Scott said Virginia’s law includes an exemption for large commercial risk and included a reporting requirement

until 2012, when the requirement was eliminated. When the law was first passed, it did not get a lot of activity, but it did

grow over time, and 12-20 insurers used the exemptions on an estimated 1,000 policies per year. Mr. Barclay added that these

exemptions are not really doing much to reduce the number of rate and form filings, because rate and forms for lines that are

not exempt are still required to be filed. Mr. Laucher said California has prior approval for all lines and asked if it might be

helpful for the industry representatives to provide details of certain types of situations or coverages that are problematic.

While it is difficult to address the overall scheme in California, in terms of prior approval, there may be issues such as

manuscript endorsement or policy approval, and risks being pushed to the surplus lines market. He suggested industry

making a list of concerns, so states can address the issues with some consistency. Mr. Nowak said industry representatives,

including NAMIC, PCI and AIA, could work together to create a consolidated list of issues and concerns, and committed to

trying to have the list available by mid- to late July, approximately four to six weeks from the call.

2. Discussed Clarification for “Various” and “Recent” in Charges 2 and 3

Mr. Barclay read the Working Group’s second charge, which is to conduct a survey of the average time for approval of

commercial lines forms and rates by the states, to include the extremes, for various types of commercial insurance products.

He asked what types of insurance products should be considered and suggested using SERFF’s product coding matrix to

group or collect types of insurance. He suggested taking overall types of insurance that are in the product coding matrix,

deleting personal lines, ignoring sub-type of insurance, and trying to collect data in buckets based on type of insurance for

commercial lines. Ms. Nelson said once the Working Group has the results, it may need to dig a little deeper into sub-type,

but ignoring the sub-type for now would be a good plan.

Ms. Nichols asked if the goal of the survey was to use SERFF as a clock to count the amount of time the filings are open or to

get deeper information. She said the way SERFF counts the filings is basically on the regulators’ clock, regardless of how

compliant the filing is and how responsive the industry is in remedying the areas of non-compliance, and she questioned how

Attachment Two


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good of measuring stick it would really be. Mr. Barclay asked how easy it would be for SERFF to generate data with average

time for approval—how much time the filing spent in the company’s hands to respond to regulator questions. He said

Washington currently has a back-office system that produces information on how long it takes for final action on a filing,

with a distinction between how long it spent with companies and regulators. Ms. Nelson said Missouri monitors productivity

for both life/health and property/casualty, and uses two units of measure: “first action,” the time of submission to the date of

the first of either disposition and/or raised objection, which lets regulators know how long filings sit in inventory before

regulators can process them; and “complete turnaround time,” which is data submission to data final disposition. There are

situations in which a state has an extended review due to legal research, or industry takes longer to respond, but she said

those balance each other out in the overall aggregate. Mr. Barclay acknowledged that different states do different things and

suggested trying to obtain the information using SERFF, because it will likely offer the most uniformity from state to state

and simplify the process. He asked NAIC staff to look into what measures SERFF could produce for commercial lines

insurance and provide a report at the Working Group’s next meeting. Mr. Laucher said that if SERFF is not able collect or

report the information needed for the charge, the Working Group should look at how many filings are completed within a

certain timeframe, such as 60 or 90 days. He said there may be some filings that take a long time, which may throw off the

average, but showing the percentage of filings completed within a certain timeframe would help give the Working Group a

better picture. California has an intervener process, which prohibits the regulators from moving on a filing for 45 days, and

he said it may be best to pull time information by state. Mr. Barclay acknowledged that however the data is gathered, it will

be by state. He agreed that averages can be distorted by outliers, and said he would be interested to see what kinds of

distributions SERFF can create.

Mr. Barclay read the Working Group’s third charge, which is to document the experience of the states that have recently

proposed or enacted legislation and/or implemented regulatory measures to streamline commercial lines regulation and what

lessons have been learned from these efforts. He said the review should go back far enough to have a meaningful collection

of information, but the further back the review goes the harder it is to remember. He suggested a range of three to five years,

from about 2009 forward. Ms. Scott said she felt that five years was a good regulatory look back. Mr. Laucher added that

going back less than five years would not yield any kind of credible results.

3. Received Status on Compilation of NAIC Compendium Charts

Sara Juliff (NAIC) read the Working Group’s first charge, which is to develop a summary of the state laws and regulations

concerning commercial lines rate and form filing and approval, including the authority to exempt certain lines, whether that

authority has been used, and the definition of large-scale commercial risk exceptions. She read from the work plan that NAIC

staff had been assigned to compile a table of information found in the NAIC legal compendium charts II-PA-10, “Rate Filing

Methods for Property/Casualty Insurance, Workers’ Compensation, Title”; and II-PC-20, “Property and Casualty

Commercial Lines Re-engineering.” She reported that the process of compilation had begun, but that the information in II-

PA-10 has personal lines information mixed in with commercial lines, and she anticipates needing some time to review each

state to pull out the commercial-lines-related information.

Having no further business, the Commercial Lines (EX) Working Group adjourned.

W:\National Meetings\2013\Summer\TF\Speed\CommercialLines\6-25.docx

Attachment Three


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© 2013

National Association of Insurance Commissioners 1

2013 Summer National Meeting

Indianapolis, IN

Operational Efficiencies (EX) Working Group Meeting Summary Report

The Operational Efficiencies (EX) Working Group completed the following since the Spring National Meeting:

1. Adopted an amendment to the Property and Casualty Uniform Product Coding Matrix (PCM). The Working Group

considered changes to the PCM that would go into effect Jan. 1, 2014. The following changes were adopted:

Modified the language under the Annual Statement Line column of the PCM to accurately reflect that premiums and

losses may be reported on either annual statement line 2.1 or 2.3, depending on whether the product is or isn't

federally reinsured. With this solution, regardless of whether the premiums and losses are reported on the annual

statement line 2.1 or 2.3, the product would continue to be submitted for review under Sub-TOIs, 02.3001

Commercial Flood or 02.3002 Personal Flood. The language in that column is now as follows: 02.3 or 02.1

2. Adopted amendments to the Life, Accident & Health, Annuity and Credit Uniform Product Coding Matrix. The

Working Group considered changes to the PCM that would go into effect Jan. 1, 2014. The following changes were

adopted:

Added sub Type of Insurance for Group Annuities - Special: A07G.003 Contingent Deferred-- An annuity contract

that establishes a life insurer’s obligation to make periodic payments for the annuitant’s lifetime at the time

designated investments, which are not owned or held by the insurer, are depleted to a contractually-defined amount

due to contractually-permitted withdrawals, market performance, fees and/or other charges. Added sub Type of Insurance for Individual Annuities –Special: A07I.003 Contingent Deferred-- An annuity

contract that establishes a life insurer’s obligation to make periodic payments for the annuitant’s lifetime at the time

designated investments, which are not owned or held by the insurer, are depleted to a contractually-defined amount

due to contractually-permitted withdrawals, market performance, fees and/or other charges.

W:\National Meetings\2013\Summer\TF\Speed\OEWG\OEWG Summary Aug13.docx

Effective January 1, 2014

1

UNIFORM PROPERTY & CASUALTY PRODUCT CODING MATRIX

Type of Insurance

Filing Code* Sub-Type of Insurance Description

NAIC Annual

Statement Line

SERFF Type Of

Insurance

SERFF Sub-Type of Insurance

Property 1.0000

Coverage protecting the insured against loss or damage to real or personal property from a variety of perils, includingbut not limited tofire, lightning, business interruption, loss of rents, glass breakage, tornado, windstorm, hail, water damage, explosion, riot, civil commotion, rain, or damage from aircraft or vehicles.

0102.1 01.0 Property

1.0001 Commercial Property Property insurance coverage sold to commercial ventures. 0102.1 01.0001 Commercial Property (Fire and Allied Lines)

1.0002 Personal Property Property insurance coverage sold for personal, family or household purposes. 0102.1 01.0002 Personal Property (Fire and

Allied Lines)

Crop 2.1000 Coverage protecting the insured against loss or damage to crops from a variety of perils, including but not limited to fire, lightning, loss of revenue, tornado, windstorm, hail, flood, rain, or damage by insects.

02.1-02.2 02.1 Crop 02.1000 Crop-Hail Sub-TOI Combinations

2.1001 Crop-Hail All other crop or hail insurance products. 02.1 02.1001 Crop-Hail Non-Federally Reinsured Only

2.1002 Federally Reinsured Crop

Crop insurance coverage that is either wholly or in part reinsured by the Federal Crop Insurance Corporation (FCIC) under the Standard Reinsurance Agreement (SRA). This includes the following products: Multiple Peril Crop Insurance (MPCI); Catastrophic Insurance, Crop Revenue Coverage (CRC); Income Protection and Revenue Assurance.

02.2 02.1002 Crop-Hail Federally Reinsured Only

Flood 2.3000

Coverage protecting the insured against loss or damage to real or personal property from flood. (Note: If coverage for flood is offered as an additional peril on a property insurance policy, file it under the applicable property insurance filing code.)

02.3 or 02.1 02.3 Flood

2.3001 Commercial Flood Separate flood insurance policy sold to commercial ventures. 02.3 or 02.1 02.3001 Commercial Flood

2.3002 Personal Flood Separate flood insurance policy sold for personal, family or household purposes.

02.3 or 02.1 02.3002 Personal Flood

Farmowners 3.0000

Farmowners insurance sold for personal, family or household purposes. This package policy is similar to a homeowners policy, in that it has been developed for farms and ranches and includes both property and liability coverage for personal and business losses. Coverage includes farm dwellings and their contents, barns, stables, other farm structures and farm inland marine, such as mobile equipment and livestock.

03 03.0

Personal Farmowners

03.0000 Personal Farmowners

Homeowners 4.0000

A package policy combining real and personal property coverage with personal liability coverage. Coverage applicable to the dwelling, appurtenant structures, unscheduled personal property and additional living expense are typical. Includes mobile homes at a fixed location.

04 04.0 Homeowners

04.0000 Homeowners Sub-TOI Combinations

Attachment Three Speed to Market (EX) Task Force

8-24-13


EFFECTIVE January 1, 2014

Page 3 of 51

TOI

Sub-TOI

Description A03I.002 Flexible Premium Premium payments are flexible. A03I.003 Single Premium Purchase by the payment of one lump sum. A03I.004 Modified Single Premium Purchased by payment of a lump sum and additional payments during the first 12 months. A03I.005 Limited Flexible Premium The premium payment are specified for a designated time frame, i.e. 5 years. A05G Group Annuities – Immediate Non-variable

A05G.000 Annuities – Immediate Non-variable An annuity contract that provides for the fixed payment of the annuity at the end of the first interval of payment after purchase. The interval may vary, however the annuity payouts must begin within 13 months.

A05I Individual Annuities- Immediate Non-Variable

A05I.000 Annuities – Immediate Non-variable An annuity contract that provides for the fixed payment of the annuity at the end of the first interval of payment after purchase. The interval may vary, however the annuity payouts must begin within 13 months.

A06G Group Annuities – Immediate Variable A06G.000 Annuities – Immediate Variable An annuity contract that provides for the first payment of the annuity at the end of the fixed interval of payment after purchase. The interval may vary, however the annuity payouts must begin within 13 months. The amount varies with the value of equities (separate account) purchased as investments by the insurance companies.

A06I Individual Annuities – Immediate Variable

A06I.000 Annuities – Immediate Variable An annuity contract that provides for the first payment of the annuity at the end of the fixed interval of payment after purchase. The interval may vary, however the annuity payouts must begin within 13 months. The amount varies with the value of equities (separate account) purchased as investments by the insurance companies.

A06.1G Group Annuities – Immediate Non-Variable and Variable

A06.1G.000 Annuities – Immediate Non-Variable and Variable

An annuity contract that provides an accumulation based on both (1) funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and (2) funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. The contract provides for the initiation of payments at some interval that may vary, however the annuity payouts must begin within 13 months

A06.1I Individual Annuities- Immediate Non-Variable and Variable

A06.1I.000 Annuities – Immediate Variable and Non-Variable

An annuity contract that provides an accumulation based on both (1) funds that accumulate based on a guaranteed crediting interest rates or additional interest rate applied to designated considerations, and (2) funds where the accumulation vary in accordance with the rate of return of the underlying investment portfolio selected by the policyholder. The contract provides for the initiation of payments at some interval that may vary, however the annuity payouts must begin within 13 months.

A07G Group Annuities – Special Contracts with certain noteworthy attributes. A07G.001 Equity Indexed A fixed annuity that earns interest or provides benefits that are linked to an external

reference or equity index, subject to a minimum guarantee.


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Uniform Life, Accident & Health, Annuity and Credit Product Coding Matrix

EFFECTIVE January 1, 2014

Page 4 of 51

TOI

Sub-TOI

Description A07G.002 Modified Guaranteed An annuity that contains a provision that adjusts the value of withdrawn funds based on a

formula in the contract. The formula reflects market value adjustments. A07G.003 Contingent Deferred An annuity contract that establishes a life insurer’s obligation to make periodic payments

for the annuitant’s lifetime at the time designated investments, which are not owned or held by the insurer, are depleted to a contractually-defined amount due to contractually-permitted withdrawals, market performance, fees and/or other charges.

A07I Individual Annuities – Special Contracts with certain noteworthy attributes. A07I.001 Equity Indexed A fixed annuity that earns interest or provides benefits that are linked to an external

reference or equity index, subject to a minimum guarantee. A07I.002 Modified Guaranteed An annuity that contains a provision that adjusts the value of withdrawn funds based on a

formula in the contract. The formula reflects market value adjustments. A07I.003 Contingent Deferred An annuity contract that establishes a life insurer’s obligation to make periodic payments

for the annuitant’s lifetime at the time designated investments, which are not owned or held by the insurer, are depleted to a contractually-defined amount due to contractually-permitted withdrawals, market performance, fees and/or other charges.

A08G Group Annuities – Unallocated Annuity contracts or portions thereof where the Insurer purchases an annuity for the retirees. A08G.001 Funding Agreement Contracts that guarantee principal and interest for a specified period of time and do not

include the option to purchase immediate annuities that depend on the survival of the annuitant.

A08G.002 GIC Contracts that guarantee principal and interest for a specified period of time and include the option to purchase immediate annuities that depend on the survival of the annuitant.

A08G.003 Deposit Administration Annuity contracts that typically provide for an unallocated fund accumulation for active lives out of which immediate annuities are purchased for individuals at retirement and deferred annuities are purchased for terminated employees with vested benefits.

A10 Annuities – Other A10.000 Annuities – Other Not specifically described above. Continuing Care Retirement Communities

CC01G Group Continuing Care Retirement Communities

Continuing Care Retirement Communities are senior housing arrangements that in addition to housing include some provision for skilled nursing care.

CC01G.000 CCRC – Type A Type A communities are also referred to as Life Care Communities. There is no increase in the required monthly fee when the resident enters the skilled nursing facility.


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Uniform Life, Accident & Health, Annuity and Credit Product Coding Matrix

Attachment Four Speed to Market (EX) Task Force

8-24-13

INTERSTATE INSURANCE PRODUCT REGULATION COMMISSION (IIPRC) 444 North Capitol Street, NW · Hall of the States Suite 701 · Washington, DC 20001

(202) 471-3962 · fax (816) 460-7476 ·[email protected] · www.insurancecompact.org

UPDATE ON THE INTERSTATE INSURANCE COMPACT

MISSION: The Interstate Insurance Compact (“Compact”) is a key state-based regulatory modernization initiative that enhances the efficiency and effectiveness of the way insurance products are filed, reviewed and approved in the United States. The Compact’s new streamlined processes provide speed-to-market for the insurance industry, thus affording consumers quicker access to more competitive insurance products. By promoting uniformity through application of national product standards embedded with strong consumer protections, the Compact is meeting the demands of consumers, industry and regulators in the ever-changing, global financial marketplace. BACKGROUND: The Compact has been adopted by 42 States and Puerto Rico to date, representing over 70% of the premium volume nationwide. The Compact established a multi-state public entity, the Interstate Insurance Product Regulation Commission (“IIPRC”) which serves as an instrumentality of the Member States. The IIPRC is the central point of electronic filing for asset-based insurance products, including life insurance, annuities, disability income, and long-term care insurance. By leveraging the insurance regulatory expertise of the states, the Compact is able to employ one set of uniform standards with the highest level of consumer protection on a national level through the Compact’s collective framework. The Compact, funded by filing fees, implements its modernization goals without impinging on state budgets. STATUS: In June 2007, the IIPRC became operational and received its first filings within one year of its establishment. The Compact has defined speed-to-market by providing final disposition in less than 60 days. Companies of all sizes - large, medium, and small - utilize the Compact’s electronic filing platform to submit product filings using the adopted Uniform Standards. There are over 80 Uniform Standards in individual and group life, and individual annuity, long-term care, and disability income product lines adopted and available for filing use; additional standards are under development for group life and annuities. The first group life Uniform Standards have been adopted by the Compact – term life for employer groups. Throughout 2012, the IIPRC saw continued and significant growth with the number of registered companies and product filing submissions compared to the previous years. KEY MILESTONES/PLANS:

• June 2006: Inaugural Meeting of the IIPRC in Washington, DC • December 2006: First Uniform Life Standards Adopted by Members • June 2007: Operations Initiated On-Target/First Insurer Filings Received • July 2007: First Filings Approved in Under 30 Days • Summer 2009: “Mix & Match” 2-Year Timeline Removed • Spring 2011: New Product Reviewer and Actuary Join IIPRC Team • January 2013: Group Term Life Uniform Standards Eligible for Filing and Review • Spring 2013: Arkansas & Montana Join the Compact; 43 Member States • August 2013: Additional Group Term Life Standards Adopted; AR Effective for Filing

Interstate Insurance Product Regulation Compact As of April 30, 2013

Enacted Into Law (43) AK, AL, AR, CO, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MI, MN, MO, MS, MT, NC, NE

NH, NJ, NM, NV, OH, OK, OR, PA, PR, RI, SC, TN, TX, UT, VA, VT, WA, WI, WV, WY

Pending or Introduced Legislation in 2013 (3) CT, FL, NY

© 2013

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