National Association of Insurance Commissioners Insurance Summit 2022

For regulators and compliance vendors, Sept. 19 through 22 in Kansas City was a rare opportunity to build community with others working the same angle of the industry at the National Association of Insurance Commissioners’ Insurance Summit.

Regulators and financial modeling wonks got their kicks with conference topics from encouraging uniform producer licensing standards to sharing capital reserve best practices. If you missed it, buckle up and we’ll take you on a quick tour of the almost-fall Insurance Summit 2022.

Overall tracks of the session

The National Association of Insurance Commissioners (NAIC) leaned into its chronicled 150 years with several presentations that began with history lessons. From early insurance contracts in Genoa to Ben Franklin’s Friendly Society insurance company with a title far too long to recall, to fashionable dandies with no sense of financial acumen, historical anecdotes abounded as speakers illustrated how insurance regulation came to be. This idea, that regulation doesn’t happen in a vacuum, could be pegged as a general theme of the conference as well, as speakers analyzed societal and economic factors and trends that lead to regulatory pressures.

Each session was tied to one or more topic tracks:

• Diversity, equity, and inclusion
• Risk and resilience
• Communications
• Antifraud
• Market regulation
• Cybersecurity, data, and technology
• Producer licensing
• Financial regulation

Financial underpinnings of the industry and climate change

As S&P professionals Carmi Margalit and John Iten discussed the underlying market quality of both life and P&C realms of the industry, the message was clear: Insurance isn’t immune from the trends of the overall economy. As interest rates are low and bonds perform lower than historical averages, carriers have turned to riskier portfolios, which in turn requires them to maintain higher capital reserves. This means a recessive economy could quickly push an insurance carrier into a lower stability rating if it finds itself unable to maintain this financial tension.

Other sessions covered financial regulation, risk, resilience, and the industry’s capital reserves as they relate to climate change. Some regulators like Andrew Mais, NAIC Vice President and Connecticut’s Insurance Commissioner, took the stance that the industry should do more to promote things like benefits for home hardening programs. Mais asserted insurance departments should anticipate and use predictive data to push for necessary “mitigation, adaptation, and, eventually, migration” for those whose homes or businesses will be increasingly exposed to dangerous or costly climate events. Others, such as Dean Cameron, NAIC President and the Director of the Idaho Department of Insurance, said the industry should limit itself to capital reserve diligence.

Brandon Katz, M.Sc. Executive Vice President KatRisk LLC, presented the sheer amount of uninsured flood risk, saying only 5 percent of homeowners have flood insurance. Lori Croy, Director of Communications at the Missouri Department of Commerce and Insurance, presented similar concerning statistics for uninsured earthquake risk in her own state – 11.4 percent insurance for areas of the state in which earthquake is a “when not if” risk.

Many presenters and attendees agreed over the concern that flood, earthquake, fire, and other risks aren’t receiving adequate attention or insurance coverage. Most solutions, however, revolve around “consumer education,” although Katz bravely ventured that incorporating some level of flood risk into homeowners insurance – something many consumers already assume is built-in – may be one path to a future with more coverage. 

Diversity, equity, and inclusion initiatives driven by talent gap

From panels to table talks to stage presentations, one of the themes of the conference was that of having diversity, equity, and inclusion (DEI) for minority populations. Speakers on the topic commonly referred to the coming talent gap in the industry, as one generation retires out and isn’t clearly being replaced by new talent. 

Sessions covered subjects like the history of Black-owned banks and financial business as well as opportunities for mentorship and recruiting from minority communities. Some of the intriguing discussion points posed by panelists and presenters:

• Bringing Black, Hispanic, and other minority talent into the industry is challenging because there are trust barriers to engagement. The insurance industry has to demonstrate it is responsible and reliable not just for privileged populations. Eliminating barriers such as pre-licensing is an important first step. ~Christopher Gandy, LACP, Founder, Midwest Legacy Group LLC
• It’s not enough to recruit minority and historically excluded workers – you have to prove they have a path to long-term success. And you have to recognize that mentorship isn’t enough if none of the mentors available to a person haven’t faced the same adversities that they do. ~James Dean, President and Founder of JD Financial Group and Associates Inc.
• Meeting people where they’re at involves recruiting from historically Black colleges and universities (HBCUs) and other identity-specific organizations, and developing relationships in these communities. You can’t just put out a call for applications and expect people to know you want them to apply. ~Evelyn Boswell, Director of DE&I at NAIC

Producer licensing and consistency across states

While the National Insurance Producer Registry’s database of producer information has led to much easier collaboration between states, even the Producer Database (PDB) can’t help with adjuster licensing, or when emerging lines of insurance like pet insurance promise to complicate producer reciprocity.

The Monday session on producer licensing kicked off with Karen Stakem Hornig, CEO of NIPR, presenting a long history of producer shenanigans and exploits that led to legal emphasis on standardized producer licensing. Adjuster licensing, however, hasn’t had the same pressure to standardize, which has caused a few issues.

Not all states require adjusters to have licenses. Other states have adjuster licensing for independent adjusters but not staff adjusters. State regulators had a lively debate over a legal change from Georgia. The state used to license independent adjusters only. So adjusters on staff for insurance carriers who wished to work across state lines got licenses with a designated home state (DHS) of Florida.

Georgia made a significant legal reform, however, when it removed the word “independent” from its adjuster license. Now, states like Wyoming and New Mexico have issued bulletins alerting Georgia residents that their DHS Florida license will no longer suffice for reciprocity. As Georgia resident adjusters with DHS licenses have their nonresident licenses in other states come up for renewal, those other states are starting to push back.

At the NAIC adjuster licensing session, state regulators expressed frustration with each others’ processes for adjuster resident state transfers. For instance, one regulator from Florida reminded everyone that, to issue a letter of clearance for a DHS adjuster in good standing (a formality other states’ regulators insisted emphatically were wrong), the process kicks off a license termination. This means the adjuster would be unlicensed for as long as it takes for Georgia to issue a resident license.

The issue is sure to come up again in the future, so all you wonks who follow adjuster licensing might anticipate a wave of standardization. Or, you can ignore it and let AgentSync cover you (cuz we bake that pedantic stuff in, you dig?).

Pet insurance will also certainly be a hot topic for producer licensing in the future if the NAIC conference is any indication. Some states have added pet insurance as a limited lines license unto itself. Others have made it a subordinate line under property and casualty. And consumers often assume it functions like a life or health line.

Despite having a Pet Insurance Model Law via the NAIC, this is still an area that could use efficiency and consistency.

“Let’s be clear, pets are an extension of our families,” said Richard Tozer, Principal Insurance Market Examiner at the Virginia Bureau of Insurance. “We give them health care, you can get them an MRI and extended care that is very similar to people, so a clarification that this is a subcategory of property and not healthcare or life insurance was necessary.”

Enforcement struggles without state communications

Multiple sessions on enforcement and anti-fraud efforts also emphasized the need for more cross-country coordination. Health care fraud in particular suffers from disparate enforcement efforts across states. Multiple regulators raised the issue of Medicare Advantage commercials that used false advertising or that drove consumers to fraudulent plans. 

After a week of regulatory discourse, participants were a little bleary-eyed (or maybe that was just us?), but the event underscored the need for a community of the compliance-minded and for innovative ways forward in the insurance industry.

Wait, compliance and innovation? Who does that bring to mind? It’s AgentSync, isn’t it? (Yes, yes it is.) To see how AgentSync’s products embody the convergence of compliance and innovation, check out a demo today.