Insurance Compliance

A Smarter, More Efficient Way to Manage Adoption Filings

by Karen Barrett Daley

Tracking and managing changes to bureau material has long been a time-draining process for property casualty insurance company staff. When we released Bureau Monitor, a subscription service housed within our StateFilings.com system, our aim was to make our clients aware immediately if there were updates required for their bureau based products. By centralizing loss cost, rule and form circulars for all bureaus and lines of business in a single location and then generating automatic notifications explaining the impact on our clients, the system was able to relieve in-house compliance teams from managing the minutiae of circular tracking. It also provided a crucial first line of defense against compliance violations.
We’ve now taken this process one step further. By combining our useful bureau monitoring service with the filing capabilities built into StateFilings.com, we’re launching our newest service: Bureau Maintenance. It’s a single, automated solution for keeping your state filings current.

How Bureau Maintenance Works

Our team of filing experts monitor the circulars impacting loss costs, rules and forms released by the various rating bureaus, including the Insurance Services Office (“ISO”) and the National Council on Compensation Insurance (“NCCI”). We publish these circulars to Bureau Monitor, which then generates a notification if your company is required to file an update to your product based on your specific adoption profile. Using Perr&Knight’s StateFilings.com platform, our state filings experts will submit the change on your behalf, eliminating your risk of falling behind or slipping out of compliance. Using an online dashboard, you’ll be able to see in real-time which adoptions have been filed and which are pending submission.

Why automate your state filings?

As technology becomes faster, smarter and more secure, it makes sense to outsource to machines the tasks that require lower levels of human discernment. Standard bureau adoption filings are an excellent function for automation because the process requires the management of numerous minor but important details, instead of critical decision-making, which is better suited for people. This approach frees up time and attention for your teams to focus on more complex product compliance tasks. Bureau Maintenance is simply that—maintaining bureau-based products in real-time, rather than being forced to play major catch up down the road.
Read more: Expert tips to speed up state filing approvals.

Updates that matter to you

Because your Bureau Maintenance profile will be unique to your company, you’ll be alerted to only those filing requirements that apply to you. Based on the lines of business you follow, your adoption status, and programs in the states where you operate, you’ll know exactly which circulars need to be adopted via a state filing. This eliminates the need for manual scrutiny of each published circular by your staff.
Even for companies that don’t seem overwhelmed by filing updates, Bureau Maintenance can protect you from the risk of non-compliance. For example, affiliating with an auto-adopt or file-on-behalf status will likely minimize your number of filings. However, in cases of the states that prohibit auto-adoption, you are required to pay attention and submit your filings accordingly. Bureau Maintenance will ensure that nothing falls between the cracks.  On other hand, if you have the opposite bureau affiliation profile — i.e. you have adopted loss costs, rules or forms from a particular bureau at single point in time and don’t intend to make updates— you could still be on the hook for mandatory changes if the bureau adjusts its materials based on regulatory changes. Once again, Bureau Maintenance will make sure that you keep current and compliant.
Read more: How to streamline bureau monitoring.

Maximize your resources

We deliberately created a competitive pricing structure for Bureau Maintenance because this ancillary service is designed to work in conjunction with your in-house teams. As a result, offloading the time-consuming tasks to automated software will increase the efficiency of your human capital on the revenue-generating tasks that forward your business objectives and competitive advantage.
Bureau Maintenance takes away the final piece of worry regarding the management of bureau adoption state filings. By letting dedicated software pay non-stop attention to bureau updates that impact your filings, you reduce the risk of overloading your internal teams or slipping into non-compliance. In an era where more and more businesses are capitalizing on the advantages of improved technology, automating these simple tasks just makes sense.

Contact Perr&Knight today to learn more about how Bureau Maintenance can eliminate your state filings and bureau monitoring headaches.

Think Before You Act: Why Expert Solution Architecture Should Always Precede Critical Data Initiatives

by Joseph Allen

Deploying a data solution that addresses a real-world business problem is not just about drafting a quick set of specs and coding to meet those requirements. Instead, it’s about architecting a solution that will satisfy your true business need.
As experts in insurance data services, we have seen many companies dive headfirst into development without taking the time to outline a process that delivers not only their desired data set, but a viable strategy to keep moving forward.
Companies can sink deeper and deeper into development quicksand, increasing budgetary spend and extending the project timeline by piling more features onto both legacy and modern systems that don’t fully address the problem. To achieve lasting solutions that deliver maximum value, slow down and think before you act.

Focus on the problem, not the tools

Before you undertake any data initiative, it’s vital that you dedicate sufficient time and attention to define the full scope of your problem. We have seen companies get distracted by the latest, greatest software tools and fail to determine whether or not these tools will deliver the information they need.
Focusing primarily on tools is like shopping for ingredients without an idea of the meal you will be preparing. Instead, clearly articulate the problem first, then determine how you will utilize the tools at your disposal to solve this problem as efficiently as possible.
At Perr&Knight, most of our engagements are preceded by an in-depth workshop, during which we aim to identify the true need. Many companies think they need help with one aspect, but it turns out that addressing a different issue will solve their challenge. We apply our insurance data services expertise to determine short-term success as well as define a long-term solution that will help our clients avoid this situation in the future.

Outline specific future actions and activities

After assessing your problem, articulate the specific activities that you will take as a result of obtaining your data set. Knowing these actions informs the scope of what should be contained in your reports. Focus on obtaining useful information that will equip your teams to perform their jobs more efficiently and effectively.

Teams must understand how their roles support your business

IT teams might be deeply focused on technical aspects of the initiative but lack sufficient context for the project as a whole. As such, their expertise is stifled. Don’t limit your IT teams to only the execution of the plan – loop them in early to make sure that the ultimate solution takes into consideration your actual business needs. Spend time bringing your IT team up to speed on how their input fits into the bigger picture of your data initiative and what your overall goals and outcomes are. Equipped with this knowledge, your technical teams become more valuable project assets.

How to avoid “analysis paralysis”

Successful deployment efforts start with the known and build incrementally from there. Look for what you can define that will provide an immediate benefit. In the effort to plan for every possible event, software developers can end up overdesigning their solution architecture. Companies that want to create a massive system to address every possible future need often get stuck developing bloated, unwieldy software that takes forever to deploy.
Perr&Knight’s process is to plant a firm stake in the ground by targeting a specific data consumer with a specific need, then focus on building out just those portions. From there, we expand incrementally, generating deliverables that are definable, measurable, and achievable.

More expert tips to keep your data initiatives on track

  • DON’T cast too wide a net. Keep your eye on the specific problem you’re trying to solve.
  • DON’T chase trends. Make sure your solution delivers the information that addresses your core
  • DO make sure that you are being specific. There’s no point in coding to vague specs.
  • DO define what constitutes success before you undertake the project, including how you will measure progress along the way and metrics that ensure you accomplish various scope items throughout development.

The fact is, data reporting is not a sexy profit center – but it is a critical part of doing business. Everyone wants a quick plug-and-play fix, but solution architecture is more about business modeling than a strictly technical solution. There is no such thing as a silver bullet. Quality solution architecture starts at the business level, i.e. understanding your business problem and applying that knowledge as your guide to implement the best solution. Data initiatives are a marathon, not a sprint. Keep this in mind and you’re sure to go far.

For more information about Perr&Knight’s expert insurance data services, contact us today.

Unique Challenges of Travel Insurance

by Susan Cornett

According to the U.S. Travel Association, Americans took 2.2 billion leisure trips in 2016. This skyrocketing volume of leisure travel opens up new opportunities to develop additional creative products to protect travelers from a range of travel-related setbacks. Today’s travel insurance products run the gamut from standard offerings such as flight cancellation due to illness, to buying the first round of drinks after scoring a hole-in-one on the green, to covering your pet’s stay at the kennel when your return trip is delayed.
But travel insurance product development is like playing a game of Twister. Filing requirements for New Mexico? Put your left hand on blue. Florida? Right hand on yellow. When the dust settles, you’re left with a complicated balancing act of variables that shift according to jurisdiction and coverage.
When you file other lines of business, such as personal auto or homeowners, it’s usually the same SERFF TOI in all 51 jurisdictions. But travel insurance comes with a unique set of stipulations that vary by jurisdiction, coverage type and, in some jurisdictions, coverage amount.
During decades of providing regulatory compliance services, we have seen the ongoing changes that impact travel insurance policies. Here are some of the challenges that are unique to this evolving line of business.

The regulatory environment is changing

As travel insurance has become more popular, jurisdictions are taking a closer look at these policies. This increased scrutiny has resulted in several companies voluntarily entering into regulatory settlement agreements with various Departments of Insurance. Other companies are leaving the market entirely.
In addition to the Market Analysis Working Group (MAWG), NAIC also has a travel insurance working group in the process of drafting a new model law. NCOIL has also developed their own model. These new frameworks will require you to take a closer look at the entire scope of your travel insurance line of business:

  • If group coverage, is the master policyholder a valid group?
  • Are your distribution channels appropriately licensed for each jurisdiction?
  • How do your distribution channels operate?
  • Are the rates consistent across the channels, with all other variables (trip cost, residence, etc.) the same?
  • Do you have processes in place to monitor or audit those distribution channels?

To avoid stiff penalties, make sure you have established the appropriate regulatory compliance processes.

Install adequate support when offering inconvenience benefits

Many insurers are offering inconvenience benefits to make their customers’ lives easier when filing a claim. Things like ultra-quick disbursements or payments via PayPal. If your company is considering offering this level of customer service on travel insurance products, be sure that you have the right operational structure in place before you go to market.

Current regulatory settlement agreements can impact your offerings

Even if you haven’t been flagged for violation, make sure you stay current with the results of regulatory settlement agreements, so you are aware of what regulators are looking for. Your in-house teams or regulatory compliance services provider should issue regular reports to keep your product development team aware of the settlement agreements that can impact your offerings. The Missouri State DOI has compiled a list of the results of recent market conduct investigations, including settlement agreements. This comprehensive list is a good place to start.

Avoid benefit overlap

There is potential for benefit overlap with both A&H and P&C coverages when issuing travel insurance. Some jurisdictions require additional disclosures to remind consumers that coverage is limited or supplemental. Other jurisdictions are requiring insurers to clearly state that a trip cannot exceed 6 months. Otherwise, policies that are too rich in accident and health coverage might raise a red flag with the DOI, making it appear that you are trying to circumvent the Affordable Care Act.
In addition to accident and health considerations, insurers should establish a clear demarcation between traveler benefits and homeowners’ or renters’ insurance plans. Insureds should be reminded to review their existing coverage so that they are aware of overlapping coverage.

Be aware of regulatory requirements regarding excess

Some jurisdictions will not allow excess plans and will require you to be the first payer. These changes can affect rates and filing requirements between jurisdictions. Pay attention to details like this before you undertake the filing process.

Product architecture can vary by jurisdiction

Instead of a single countrywide travel insurance policy modified for each state, you may need multiple versions. This could be because a state requires a split filing (A&H and P&C), or a state doesn’t allow variability. A&H benefits in excess of $50,000? New Hampshire requires insurers to file the P&C coverages separately from the A&H. Check with each state’s Department of Insurance for product architecture requirements as you begin product development.
Hasty or sloppy travel insurance product development jeopardizes approval, which impacts your speed to market. Don’t jump into the travel insurance line of business without taking a careful look at what will be required for every policy in every jurisdiction.
At Perr&Knight, our team of actuaries and product development experts are familiar with the extensive list of requirements for both accident and health and property and casualty insurance. This deep understanding of both sides of the coin can help you navigate the challenges that arise when drafting travel insurance policies.

For more information about how Perr&Knight’s insurance product development services can help you increase speed to market on your travel insurance products, contact us today.

 

How to Get Commercial Lines Rates Approved in Highly Regulated States (CA, FL, NY, TX, WA)

by Michael Covert

For insurance companies with nationwide products, getting your commercial lines rates approved in heavily regulated states can lead to frustration, confusion and wasted resources. There’s a reason certain states have earned their reputation for being difficult: their requirements are complex and thorough.
This article outlines the most important steps you should take when tackling submissions in highly regulated states to obtain speedy approvals–so you can get on with your business.

Know Your Filing Requirements

Each state has specific requirements that must accompany your filing. Understanding what is and is not required for each state and line of business is key to a timely approval. Carefully examine state filing requirements like return on equity exhibits (which support expenses and profit load), actuarial memorandums, making sure any forms with rate impact have corresponding rates in your manual, understanding the allowable rating flexibilities if any, and how they differ by state, etc. For example, in Florida, many commercial lines rate filings are considered “informational” and don’t require support to be filed, just maintained internally.

Actuarial Transmittals

California, Florida, New York, and Texas require specific transmittals. Every state Department of Insurance expects the filer to fully understand all requirements before submission. Some common transmittals for these states are the California Prior Approval Rate Applications, New York’s Rate Filing Sequence Checklist, the Texas Exhibit L and related actuarial transmittals, and the Florida Rate Level Indications Workbook, Actuarial Memorandum and Actuarial Opinion requirements (only for lines of business where Florida filings are not informational).
Filling out these exhibits is generally very difficult for someone without extensive filing experience.  Completing these documents incorrectly can lead to numerous Department questions or disapproval. In worst case scenarios, poor or incomplete submissions can upset Department staff, possibly making it more difficult to receive approval in the future. 

Actuarial Support Required

The actuarial support required for your filing depends on whether your proposed program is new or a revision. If support is not supplied in the way the specific Department requires, your filing will likely be disapproved and have to be resubmitted. This can add to cost, slow down your timeline and make it more difficult to get approval after resubmission.
Detailed actuarial support/data is generally required for filing revisions with rate level impact. For new programs, detailed competitor support using approved filings in the specific state is often required. Using filings from other states as competitive support will usually not be acceptable.

Responding to Department Objections

When it comes to state filings, it’s best to know your state requirements inside and out, since it is likely you will receive multiple filing questions before approval. Each Department asks different types of questions and each Department is looking for specific responses based on the type of submission. Don’t back yourself into a corner by responding incorrectly or supplying too little (or too much) information during the interrogatory process.
Departments of Insurance are savvy. Reviewing state filings is what they do, day in and day out. The challenge you face is that Departments have very specific requirements and it is difficult to determine the specific details necessary to satisfy their unique stipulations. This is where working with professional insurance support service providers can be a huge help.
When managing filings in highly regulated states, insurance industry experience is invaluable. Many of the clients we help involve situations where the company has submitted a filing incorrectly in one of the above states and requires assistance sorting out the resulting obstacles. Usually, the company’s support data was insufficient or their actuarial transmittals were filled out incorrectly. Completing your filing incorrectly without realizing it ultimately complicates things as you may not know which aspect of your filing needs to be adjusted. It then becomes a difficult puzzle to solve which variables require correction. Each of these steps impedes the process, burning through time and resources.
Outsourcing to insurance experts who have deep experience in the most difficult states, as well as relationships with regulators at the Department of Insurance, streamlines the process and saves you from a costly and lengthy correction and resubmission process. Experts make sure you go through the process methodically, checking and double checking the necessary support before you submit. This will save time and money on the back end, helping to achieve speed to market.

The Benefits of a Mock Market Conduct Exam

by Terri Hitchcock

Authors: Terri Hitchcock, JD, Director of Product Design and Nancy Self, Sr. Product Design Consultant
Regulatory compliance infractions are damaging to an insurance company. Violations can result in fines, cease & desist actions, license suspensions, or, in worst case scenarios, loss of a company’s certificate of authority. In addition to these sanctions from the state DOI, compliance failures can devalue stock and generate terrible press that creates lasting reputational harm.
The best way to handle a compliance violation is to not receive one in the first place. One of the most effective ways to discover compliance weaknesses is to carry out a mock market conduct exam. These “non-official” reviews reveal the systems and processes that increase your risk of penalty when your company comes under examination.
In this article, we’ll discuss how mock market conduct exams are your company’s smartest strategy to uncover potential compliance issues and get ahead of the problem.

Market Conduct Exams in General

Market conduct examinations are the means by which regulators examine the practices, policies, and behaviors of an insurer in the marketplace. As a result, they focus on a broad range of consumer protection topics such as company operations, complaint handling, marketing and sales, producer licensing, policyholder services, claim handling, underwriting, and rating.
Exams will vary. Some are all-encompassing, while others are limited to certain topics. Some states (California, for example) have a regular schedule for market conduct exams, while others may conduct “targeted” exams. Targeted exams can be triggered by things such as complaint activity (i.e., an uptick in complaints or the recurrence of a particular type of complaint) or a significant premium volume change.  In all cases, it’s best to be prepared so when regulators come knocking, you’re not left scrambling.
A “mock” market conduct exam describes the review of your organization by someone other than a regulator (i.e. a contracted regulatory compliance services company or your organization’s internal compliance department).

How Mock Market Conduct Exams Can Help

Conducting an internal compliance audit or partnering with experienced third-party insurance consultants can help your organization identify violation-worthy practices and discover areas you hadn’t considered that could expose you to compliance violations. These “mock” market conduct exams can also help identify gaps between what your policies articulate and how your organization actually operates.
Some companies choose to handle mock market conduct exams internally, but many companies lack the human resources to devote staff for the time needed to conduct a comprehensive mock exam. External insurance consultants can get into the nitty-gritty, pulling random files and double checking against the same criteria that an examiner would–things like claim files, whether or not notices are sent in the correct number of days, adjusting to average reserves; if not, do you have the right documentation in the file? This close scrutiny ensures that you’re looking as deeply as an auditor would.
At Perr&Knight, we don’t just perform mock exams, we advocate for our clients. In addition to identifying potential weaknesses, our regulatory compliance services help companies figure out how to bridge the gap between their current conduct and what they should be doing. This helps companies get on track before the market conduct examiner arrives. Self-identifying problems gains points in the eyes of the examiner since examiners place value on proactivity and self-awareness.
Get comfortable with the fact that it’s only a matter of time before your company is subject to a market conduct exam. Your best bet for minimizing the impact of a negative market conduct exam is to allocate time and resources in advance. In addition to mock market conduct exams, we recommend regularly reviewing your policies and procedures with staff and making sure that these rules are being followed. Also, study market conduct exams on state DOI websites and look at the NAIC regulator handbook to obtain specifics on areas that will be covered, should you receive an exam notice. As with everything in the insurance industry, the best defense is a thorough and complete offense.

For more information on mock market conduct exams and other regulatory compliance services from Perr&Knight, contact us today.

Producer Licensing: Unglamorous and Unavoidable

by Diane Karis

Producer licensing is not complicated but too many agents put it on the backburner. Since it doesn’t bring in revenue, in the rush of day-to-day business, insurance licensing falls to the bottom of the list of priorities. The very skills that make a successful insurance producer are the traits that can cause them to deprioritize unglamorous tasks like filing paperwork and remembering to issue fees. True, there’s no creativity in this primarily “busy work” task, but failure to renew licenses can lead to significant challenges down the road.

Game Over – For Now

Ignoring license renewals creates complications and headaches that require time and money to sort out.  If a producer’s license lapses, it’s basically game over–for now. That agent can’t legally sell insurance. Your insurance agency could be exposed to hefty penalties and the producer could lose their agency appointment. You can also run into problems if the producer’s license is reinstated but his or her appointments have not. Therefore, helping agents to renew on time is simply smart business practice.
These challenges with licensing are not insurmountable. However, like almost everything that falls under the umbrella of regulatory compliance, it’s easier–and more cost effective– to get ahead of the game than to play catch up.

Challenging for Agencies of All Sizes

Managing producer appointments is a time-consuming task for agencies–especially if your agents operate regionally. Every state has a specific process for renewals and you must adhere to each set of requirements carefully. It’s not possible to cut corners. We notice that startups are most susceptible to challenges with licensing since the administrative load is so overwhelming when starting a new agency.  However, mid-size agencies who have been operating for years also have a hard time managing producer appointments after growing their staff or undergoing a territory expansion from a few states to ten or more.

The Benefits of Outsourcing

For some agencies, the smartest solution is to offload this time-consuming, detail-heavy task to an insurance support services company to manage on your behalf. We offer this service at Perr&Knight because we’ve seen the complications–most of them avoidable–that happen when agencies fall behind. Our suite of producer licensing services includes:

  • Submission of name and address changes
  • Tracking of upcoming renewals
  • Issuing of renewals reminders
  • Completion of paperwork for all 50 states and electronic submission (where applicable)
  • Issuing fee reminders to producers

Many agencies try to assist their agents by handling licensing renewals in-house. It’s a viable solution for small agencies but we’ve seen many instances where agencies grow and a single individual (or even small department) just can’t keep up with the paperwork. As a result, licenses lapse.
Another common scenario is when an individual who is overseeing renewals changes jobs or retires–and takes their knowledge, calendar and renewals status with them. This is where an outside insurance support services partner can alleviate the burden by supervising your producers’ licenses for you.
Failure to submit insurance licensing renewals on time seems like minor hiccup but it’s an oversight that can snowball quickly. Licenses are a necessary part of maintaining compliance and lapsed licenses can jeopardize your ability to operate at all. Managing producer appointments falls into the pesky category of “things that don’t make your agency money, but can cost you money if overlooked.” Helping your producers stay on top of their license renewal lessens their load, so they can focus on what they do best: selling insurance.

Get help with your insurance licensing renewals. Contact Perr&Knight to find more about our support services.

Predictive Analytics and Insurance Regulation: 5 Tips for Success

by Denise Farnan

As the influence of big data continues to rise, insurers are utilizing analytic models more often than in the past. But when launching new predictive models for use in insurance programs, it’s never a good idea to submit your model to regulators without the right support. By applying a regulatory-focused strategy, you can ensure that the review process does not slow down your model implementation.

Here are our tips for success:

Tip 1. Prepare thorough data documentation

The models you create for use in your insurance programs will be reviewed by regulators. Make sure your documentation on the data used in the model is clear and thorough, such as disclosure of internal and external data sources, data quality and accuracy checks, handling of missing data fields, as well as any adjustments you made to the data, including capping, removing outliers, etc. Regulators want to be sure best practices are followed by the modeler who conducted the analytics. To ensure that your data documentation is clear, it’s beneficial to contract an outside actuarial consulting firm to conduct an external review of your analytic model prior to submitting to state insurance departments.

Tip 2. Provide strong analytic support

Once you have documented your data, you still need to provide regulators with model validation results. Did you follow best practices when generating your predictive analytic model? A thorough regulatory review will require analytic support such as correlation and interaction tests, the statistical significance of results, confidence intervals, lift charts and many other items. Someone familiar with the regulatory review of predictive models can help ensure you are prepared with the necessary support. Once again, this is another area where it’s smart to partner with an actuarial consulting firm to confirm the accuracy of your results and conclusions.

Tip 3. Be prepared for variations by state

Remember that states may require different levels of support for regulatory approval of an analytic model. Some states have questionnaires as part of the filing process for predictive analytics models. Do all of your data fields comply with state-specific rules regarding allowable data fields? Never assume that just because your submission went smoothly in one state that you can count on an approval in another. If you’re submitting in multiple states, a third-party consultant can save you from major setbacks by performing a compliance review of your model before you submit.

Tip 4. Adopt the regulator’s perspective

Take the time to anticipate the areas that regulators will watch closely. Consider questions and concerns they might have and address them upfront in your support. This will help you stand a better chance of fast approval. If you do have questions about how to best support your model, request to discuss these concern with regulators prior to submitting your model.

Tip 5. Predictive analytic support versus intellectual property

It’s understandable that when you invest so much work and so many resources in developing your model you don’t want to share your valuable intellectual property with the world.  Whether you have developed your predictive model in-house or are using an InsurTech vendor’s model, you need to balance regulator review with protecting proprietary formulas. Partnering with a consulting firm that is familiar with confidentiality requirements can help protect your work without slowing the approval process.
When it comes to predictive models and insurance regulation, the most important thing to remember is: be prepared. Make sure your documentation clearly outlines your predictive analytic process to support the use of the model and address any state-specific regulatory concerns. It’s in your best interest to have all pertinent information at the ready so the process proceeds as smoothly as possible.

For more information about how Perr&Knight can provide predictive analytic consulting services to help you navigate the regulatory process, contact us at (888)201-5123 x3.

Expert Tips to Speed Up State Filings Approvals

by Perr&Knight

by Courtney Hughes, JD, CPCU, Manager, Regulatory Compliance
There are many reasons to try to expedite your state filings approvals. Whether you are changing rates, launching a new product, or updating a product to meet your customer’s needs, speed is critical in today’s immensely competitive insurance market.
Obtaining approvals quickly is a huge competitive advantage. Bureau filings, in particular, can be especially difficult to keep up with, because new circulars and info come out every day. For ISO, AAIS or other bureau-based products, staying on top of the frequently-changing requirements gives you a significant edge over companies that are lagging behind.  For independent products, it’s all about getting your new product or coverage to market before your competitors.
Speedy approvals can help lighten your workload by ending that process sooner, allowing you to focus your attention on the next big project. Here is a list of useful tips that can help you avoid the stumbling blocks that slow down state filings approvals.

Get prepared before submitting.

Thoroughly research the filing requirements for the states in which you plan to file well in advance of your target filing date. Understanding and complying with these requirements up front avoids the issue of states coming back to you requesting that you correct avoidable procedural issues, such as providing the wrong edition of a required transmittal document. Issues like this can delay your approval by weeks.
You can obtain current information from state department of insurance (DOI) websites, SERFF or your insurance consulting services partner. For bureau adoption filings, make sure you have collected and organized all the information from the circulars before you begin so you can provide the states with all necessary pieces of information, like the ircular number, bureau filing number and state filing number.

Submit compliant, complete, and consistent material,

Reviewers can’t approve filings that are not in compliance with their state laws. Every time they kick your filing back with questions, it slows down the time to approval. Make sure that your product development staff and actuaries, or your insurance consulting services partner, confirm that the forms, rates, and rules you plan to submit are in line with state requirements. Not all objections or issues can be prevented, but where possible, anticipate the state’s requirements for your product and try to answer any expected questions in the explanatory memorandum you submit with your filing.
Completed material also goes a long way in speeding up approvals. For example, some states require a form usage rule in your manual for each form submitted. By providing the form usage rules in your manual at submission, you avoid the objection coming in and having to scramble to create the form usage rules and get internal stakeholder approval before the deadline.
Finally, consistency is important because it makes your filing easier to review so it is more likely to be approved quickly. After the forms, rates, rules, and supporting documentation have been developed, take some time to review them carefully. Make sure, for example, that your program name is consistent between the documents, or that your explanatory memo is not referring to a form you decided not to file.

Submit your objection responses ASAP, but always before the due date.

DOIs like to speed up their workflows too, so give them everything they need to close the filing as soon as it becomes available. If you received an objection with a due date in a week, submitting your response by that deadline is good, but submitting it within two days is even better. And always be sure to respond to the state by the due date they set. If you know you will not be able to respond by that due date, contact the DOI analyst and request an extension. If you miss a due date, there’s a good chance your filing will be disapproved or rejected, putting you back to square one.

Have a plan for objection responses and status checks.

Staying on top of filings once they have been submitted is challenging because there are lots of moving pieces to manage. You need to keep track of DOI questions and their due dates and ensure that you are consulting the right internal teams for answers. You will also want to keep track of when filings have been submitted so you know when it is time to check in with the DOI to see how their review is progressing. Before you submit, you should have a plan in place for how you will keep all of the outstanding filings organized. 

Use tracking software designed for insurance.

When you have a clear insurance software tracking system in place instead of a hodgepodge of spreadsheets, databases, SharePoint, and/or emails, you can easily keep track of DOI questions and due dates. The more seamlessly you can manage the questions the reviewer throws at you, the sooner you can get the ball back into their court.

Avoid double work.

Review your internal systems to make sure they’re not slowing you down. If you use an ad hoc tracking process, you are likely doubling up on data entry, entering the information once in SERFF and again in your company’s tracking system. This can cause delays in your ability to respond to reviewer questions or use the time of valuable internal resources who could be focused on the next project. Evaluate your company’s state filings process, looking for areas you can streamline. Working with an outside insurance consulting partner can help reveal inefficiencies that you might overlook.
There are never any guarantees with state filings approvals. But preparation, planning, and organization can mean the difference between a product that is launched on time, and one that gets lost in a maze of questions and confusion.

If you have questions about strategies to speed your company’s state filings approvals, our team of insurance experts can help.

7 Pitfalls to Avoid in Providing Accident & Health Product Rate Filing Support

by Crystal London

Going through the process of a nationwide rate filing, or even filing in just a handful of states, can be a complex and lengthy process. Addressing the specific requirements of all 50 states plus DC, and provinces can get overwhelming, especially with new product filings. Each state has different filings requirements, and sometimes the differences between states are dramatic. No matter what, your end goal is profoundly important: to avoid objections, disapprovals, or the need to withdraw your filing. Ensuring that things are done properly from the get-go will make the process more streamlined in the long run.
In our decades of providing insurance state filings service for companies in all jurisdictions that write all lines of business, we’ve seen many of the common mistakes that result in lost time and wasted resources. These pitfalls can be avoided–if you know what to look for and how to take action.

Pitfall: Not knowing all state regulations and statutes

This is the single most common trap we see in state filings. Understanding the specific requirements for each state is a complicated and cumbersome process. But there’s more to it. In order to make sure your filings proceed smoothly, you also need to be aware of what we call “drawer regulations”–the unwritten rules reviewers may follow but aren’t written into the state statute. Knowing the written as well as unwritten requirements can reduce the chance of your filing being kicked back. Working with a knowledgeable actuary or state filings unit can help significantly when it comes to knowing these regulations.

Pitfall: Not knowing each state’s minimum permissible loss ratio requirements

Each state has different minimum permissible loss ratio requirements, which in turn affect rates. First and foremost, these loss ratios vary by group versus individual coverage. Individual minimum permissible loss ratio requirements are often based on NAIC individual loss ratio guidelines, however, not all states follow this guideline. Furthermore, some states extend the NAIC guideline to group coverage, while other states have their own requirements. Loss ratios can also vary by type of coverage and renewability clause, as well as invoking low or high average premium adjustments. Your rates will be different in those states based on those specific regulations. Be sure to equip yourself with these important pieces of information prior to filing to make sure you provide for the correct loss ratio for the type of policy you’re writing in a particular state.

Pitfall: Not knowing which supporting documents should accompany your filing

As we have stated before, it’s smart to file exactly the supporting documents that your state requires–and nothing more. Some states require that you submit transmittals, checklists, rating examples, underwriting guidelines and/or experience rating guidelines. Some states also have specific requirements for components that need to be included in the Actuarial Memorandum. It is also recommended to restrict the information you provide to only what is necessary to reduce the number of objections and questions; otherwise, you risk opening Pandora’s box.

Pitfall: Not taking into account time it takes to address objections

While all state filings may receive objections, limiting your number of objections not only preserves your company’s reputation with the reviewer, it reduces the amount of time required to respond, thus keeping you on schedule. In certain states like Florida, the department of insurance tries to turn around a review in 30 to 45 days. If that time period is close to expiring and you can’t respond quickly enough to the objections you receive, you risk disapproval or needing to withdraw your filing altogether.

Pitfall: Prioritizing speed-to-market over due process

Most of our clients want to offer products with the goal of launching them in as many states as possible, as quickly as possible. Due to our experience as an insurance state filing service partner, we know which states are file and use versus prior approval. Certain states allow you to begin marketing your product the moment you hit “submit” on your filing. Others require that you receive full approval before you can market your plan. Knowing the correct state standards can save you from serious infractions.

Pitfall: Lacking an end-goal for the product

It’s always a good idea to make all stakeholders sign off on your entire product, from forms to rates, in the planning phase before you get to your actual state filings. If you want a particular product to have variability, your rates need to coincide to reflect those variations. If you don’t outline these details going into the initial filing, inserting those components after the filing process has begun may require re-filing. This can be costly, time-consuming and frustrating for your entire team.

Pitfall: Inconsistency between rate manuals and forms

Inconsistency is a surefire way to elicit questions and objections from the reviewer. When we provide insurance state filings service to our clients, we always work closely with the product design unit and forms department to make sure that rate manuals are consistent with forms. This is especially important when a product’s allowed benefits vary from state to state and impact rates. Double check all relevant documents to make sure everything matches.
State filings are a complicated process that requires close attention to detail. A seemingly minor oversight can have a huge impact down the line. It’s always a good idea to partner with state filings experts who can help you manage your filings and make sure all your ducks are in a row before you begin.

If you have questions about how your filings process can be improved, contact Perr&Knight and we can discuss ways to streamline your operations.

Compliance Reporting: Complex, Costly and Crucial

by Jason Hudson

Authors: Jason Hudson, Principal & Director, Statistical Reporting & Data Services and Mark Nawrath, PMP, MBA, Principal & Director, Account Management
Statistical reporting requirements are always evolving. This fact won’t change anytime soon. Insurance companies still grumble about regulatory compliance but it’s best to just accept it: compliance reporting is an unavoidable cost of doing business.
Admitted insurance companies in the U.S. are required to send their premium, policy and claims data to a designated statistical agent. If you send incorrect data or your data is not delivered in a timely manner, your company can be fined–or shut down. Yes, it negatively impacts your bottom line. No, it’s not optional. Try to dodge reporting or cut corners and you’ll end up paying for it later in lost time, penalties or costs associated with bringing your reporting system up to date.
Here’s what you need to know about compliance reporting–and how to do it the right way.

Compare apples to apples

When working with legacy systems and forms requirements that vary by state and line of business, it’s a challenge to generate quality data in a usable format. Though it sounds like a simple mapping exercise to match data points and formats, it can actually become a time- and labor-intensive process that still results in data omissions. Since ratings agencies and other regulatory bodies require data that is derived based on their respective reporting requirements, it’s smart to work with an insurance operations consulting firm who can ensure that you’re capturing and reporting the correct information, no matter from which system you are drawing your data.

Begin with the end in mind

Remember: compliance reporting is not optional. You need to establish data capture and reporting processes that meet agent and state requirements and every line of admitted business your company writes. Implement a statistical reporting best practice that addresses the whole picture, even if it means capturing data that you might not appear to “need” right now. The more quality data you capture, the more easily you will be able to meet the conditions of the statistical agents, Departments of Insurance and/or the NAIC, even if they change over time.

Get ahead of the curve

Stay on the front end of developing your stat reporting best practices. Don’t be reactive. Take into account the lead time required to incorporate new codes and new and updated insurance products, while staying on top of the constant influx of data from the products you currently offer. Putting a comprehensive compliance reporting strategy in place frees you from attachment to individual staff members who might retire or otherwise move on, taking your company’s compliance processes with them.

Process experts aren’t necessarily insurance experts

In an industry as heavily regulated as insurance, no error or oversight is ever insignificant. When working with an outside consultant to develop and implement a compliance reporting plan, partner with a consulting firm with specific expertise in insurance. General operations and technology consultants may offer assurances that they can manage insurance compliance, but they lack the in-depth knowledge required to develop a plan that addresses the increasingly complex insurance bureau requirements. Speak candidly with your insurance operations consulting firm before buying a new software system or implementing a new process so they can ascertain the extent of your needs and help you develop a system that addresses all aspects of your reporting. 

Software designed by insurance experts

Managing so many forms of disparate data can quickly overwhelm an insurance company’s internal compliance department. One option is to use statistical reporting software tailored specifically to the needs of insurance companies. We developed the Perr&Knight data model solution for precisely this reason. The software’s powerful insurance-specific algorithms process your company’s data and formats for appropriate reporting to various regulatory bodies.
However, keep in mind that software is no substitute for insurance expertise. We’ve seen insurance companies purchase expensive data management systems that were billed as having the ability to do stat reporting but ultimately can’t deliver. These systems can capture data, but because they were not designed with complex requirements for compliance reporting in mind, they don’t have logic in place that can normalize the data, apply the appropriate rules and ultimately meet bureau specifications.

Stay on top of reporting by going “over the fence”

At Perr&Knight, another option is available: we can handle statistical reporting for you, using what we call the “over the fence method.” We ask our clients to simply toss all their data, in its various formats, “over the fence” to us. We then create and execute a series of processes to combine data sets, resulting in a clean format that matches the requirements of various regulatory bodies.
For a mandatory practice, regulatory compliance is remarkably complicated to manage. Mistakes are costly and most in-house compliance departments have a hard time keeping up. Implement a well-thought-out process and you’ll put your company in the best position to maintain compliance, no matter the requirements, and to be best prepared when changes arise.

For questions about how to streamline or update your company’s statistical reporting, contact Perr&Knight at (888) 201-5123 x3.