© 2011 National Association of Insurance Commissioners
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State financial regulators are subject to a peer review through an accreditation process. To achieve
accreditation, an insurance department is required to undergo a comprehensive review by an
independent review team every five years to ensure the department continues to meet baseline
financial solvency oversight standards. The accreditation standards require state insurance departments
to have adequate statutory and administrative authority to regulate an insurer's corporate and financial
affairs, as well as the necessary talent and resources to carry out that authority.
Market Regulation: Market regulation attempts to ensure consumers are charged fair and reasonable
insurance prices, have access to beneficial and compliant insurance products and insurers operate in
ways that are legal and fair to consumers. With improved cooperation among states and uniform market
conduct examinations where uniformity is needed, regulators hope to ensure continued quality
consumer protection at the state level. Traditional market conduct examinations occur on a routine
basis, but also can be triggered by complaints against an insurer. These exams review producer licensing
issues, complaints, types of products sold by insurers and producers, producer sales practices,
compliance with filed rating plans, claims handling and other market-related aspects of an insurer’s
operation. When violations are found, the insurance department makes recommendations to improve
the insurer’s operations and to bring the company into compliance with state law. In addition, an insurer
or insurance producer may be subject to civil penalties or license suspension or revocation.
Insurance regulators, through the NAIC, began the Market Conduct Annual Statement (MCAS) in 2002
with the goal of collecting uniform market conduct related data. The MCAS provides market regulators
with information not otherwise available for their market analysis initiatives. It promotes uniform
analysis by applying consistent measurements and comparisons between insurers. MCAS has always
been a collaboration of regulators, industry and consumers who recognize the benefits of monitoring,
benchmarking, analyzing, and regulating the market conduct of insurance companies. Through this
teamwork, MCAS has grown from eight states collecting only Life and Annuity information to nearly all
states collecting Property and Casualty data, as well as Life and Annuity information.
Consumer Services: The single most significant challenge for state insurance regulators is to be vigilant in
the protection of consumers, especially in light of the changes taking place in the financial services
marketplace. State insurance regulators have established toll- free hotlines, Internet Web sites and
special consumer services units to receive and handle complaints against insurers and insurance
producers. The state insurance regulators also have launched an interactive tool to allow consumers to
research company complaint and financial data using the NAIC Web site. Called the Consumer
Information Source, this web-based tool allows consumers to file a complaint, report suspected fraud
and access key financial and market regulatory information about insurers
During 2010, state insurance departments handled over 2.1 million consumer inquiries and over 300,000
formal consumer complaints. As needed, state insurance departments worked together with claimants,
policyholders and insurers to resolve disputes. In addition, many states sponsor consumer education