Chapter
233
2008 -- H 7867 SUBSTITUTE B
Enacted 07/04/08
A N A C T
RELATING TO INSURANCE
Introduced By: Representatives Kennedy, Naughton, Lewiss, Pacheco, and Shanley
Date Introduced: February 26, 2008
It is
enacted by the General Assembly as follows:
SECTION
1. Title 27 of the General Laws entitled "INSURANCE" is hereby
amended
by
adding thereto the following chapter:
CHAPTER 71
MARKET CONDUCT SURVEILLANCE ACT
27-71-1.
Short title. – This chapter shall be known and may be cited as the
“Market
Conduct
Surveillance Act”.
27-71-2.
Purpose – legislative intent. – (a) The purpose of this chapter is
to establish a
framework
for insurance market conduct actions, including:
(1)
Processes and systems for identifying, assessing and prioritizing market
conduct
problems
that have an adverse impact on consumers, policyholders and claimants;
(2)
Market conduct actions by a commissioner to substantiate such market conduct
problems
and a means to remedy market conduct problems; and
(3)
Procedures to communicate and coordinate market conduct actions among states to
foster
the most efficient and effective use of resources.
(b)
This chapter does not apply to entities regulated by the office of health
insurance
commissioner
under chapter 42-14.5 (“The Rhode Island Healthcare Reform Act of 2004 –
Health
Insurance Oversight”) or any insurer licensed only in the state of Rhode
Island.
27-71-3.
Definitions. – (a) “Commissioner” means the “director of the
department of
business
regulation” or his or her designee.
(b)
“Complaint” means a written or documented oral communication to the
commissioner
primarily
expressing a grievance, meaning an expression of dissatisfaction. For
healthcare
companies,
a grievance is a written complaint submitted by or on behalf of a covered
person.
(c)
“Comprehensive market conduct examination” means a review of one or more lines
of
business of an insurer domiciled in this state that is not conducted for cause.
The term includes
a
review of rating, tier classification, underwriting, policyholder service,
claims, marketing and
sales,
producer licensing, complaint handling practices, or compliance procedures and
policies.
(d)
“Market conduct action” means any of the full range of activities that the
commissioner
may initiate to assess the market and practices of individual insurers,
beginning
with
market analysis and extending to targeted examinations. The commissioner’s
activities to
resolve
an individual consumer complaint or other reports of a specific instance of
misconduct are
not
market conduct actions for purposes of this chapter.
(e)
“Market analysis” means a process whereby market conduct surveillance personnel
collect
and analyze information from filed schedules, surveys, required reports and
other sources
in
order to develop a baseline and to identify patterns or practices of insurers
licensed to do
business
in this state that deviate significantly from the norm or that may pose a
potential risk to
the
insurance consumer.
(f)
“Market conduct examination” means the examination of the insurance operations
of
an
insurer licensed to do business in this state in order to evaluate compliance with
the applicable
laws
and regulations of this state. A market conduct examination may be either a
comprehensive
examination
or a targeted examination. A market conduct examination is separate and
distinct
from
a financial examination of an insurer performed pursuant to the Rhode Island
general laws,
but
may be conducted at the same time.
(g)
“Market conduct surveillance personnel” means those individuals employed or
contracted
by the commissioner to collect, analyze, review or act on information on the
insurance
marketplace,
which identifies patterns or practices of insurers.
(h)
“National Association of Insurance Commissioners” (NAIC) means the organization
of
insurance regulators from the fifty (50) states, the District of Columbia, and
the four U.S.
territories.
(i)
“NAIC” market regulation handbook” means a handbook, developed and adopted by
the
NAIC, or successor product, which:
(A)
outlines elements and objectives of market analysis and the process by which
states
can establish
and implement market analysis programs; and
(B)
sets up guidelines that document established practices to be used by market
conduct
surveillance
personnel in developing and executing an examination.
(j)
“NAIC market conduct uniform examination procedures” means the set of
guidelines
developed
and adopted by the NAIC designed to be used by market conduct surveillance
personnel
in conducting an examination.
(k)
“NAIC” standard data request” means the set of field names and descriptions
developed
and adopted by the NAIC for use by market conduct surveillance personnel in an
examination.
(l)
“Qualified contract examiner” means a person under contract to the
commissioner,
who
is qualified by education, experience and, where applicable, professional
designations, to
perform
market conduct actions.
(m)
“Targeted examination” means a focused exam conducted for cause, based on the
results
of market analysis indicating the need to review either a specific line of
business or
specific
business practices, including but not limited to, underwriting and rating,
marketing and
sales,
complaint handling operations/management, advertising materials, licensing,
policyholder
services,
non-forfeitures, claims handling, or policy forms and filings. A targeted
examination
may
be conducted by desk examination of by an on-site examination:
(1)
“Desk examination” means a targeted examination that is conducted by an
examiner
at a
location other than the insurer’s premises. A desk examination is usually
performed at the
department
of business regulation’s offices with the insurer providing requested documents
by
hard
copy, microfiche, discs, or other electronic media, for review; and
(2)
“On-site examination” means a targeted examination conducted at the insurer’s
home
office
or the location where the records under review are stored.
(n)
“Third-party model or product” means a model or product provided by an entity
separate
from and not under directed or indirect corporate control of the insurer using
the model
or
product.
27-71-4.
Domestic responsibility and deference to other states. – (a) The
commissioner
is authorized to conduct market conduct examinations as deemed necessary by the
commissioner
for Rhode Island policyholder protection, which shall be accomplished by
comprehensive
or targeted examinations of domestic insurers and targeted examinations of
foreign
insurers, based on the results of market analysis. The commissioner may
delegate
responsibility
for conducting an examination of a domestic insurer, foreign insurer, or an
affiliate
of an
insurer to the insurance commissioner of another state if that insurance
commissioner agrees
to
accept the delegated responsibility for the examination.
(b)
The commissioner may delegate such responsibility to a commissioner of a state
in
which
the domestic insurer, foreign insurer, or affiliate has a significant number of
policies or
significant
premium volume.
(c)
If the commissioner elected to delegate responsibility for examining an
insurer, the
commissioner
shall accept a report of the examination prepared by the commissioner to whom
the
responsibility
has been delegated.
(d)
In lieu of conducting a market conduct examination of an insurer, the
commissioner
shall
accept a report of a market conduct examination on such insurer prepared by the
insurance
commissioner
of the insurer’s state of domicile or another state, unless:
(1)
The laws of that state applicable to the subject of the examination are not
deemed by
the
commissioner to be substantially similar to those of this state;
(2)
The examining state does not have market conduct surveillance system that the
commissioner
deems comparable to the market conducted surveillance system required under
this
chapter;
or
(3)
The examination from the other state’s commissioner has not be conducted within
the
past
three (3) years.
(e)
If the insurance commissioner or the designee to whom the examination
responsibility
was
delegated pursuant to paragraph (a) of this section or the report of a market
conduct
examination
prepared by the insurance commissioner of another state pursuant to paragraph
(d) of
this
section, did not evaluate the specific area or issue of concern to the
commissioner or a
specific
requirement of Rhode Island law, the commissioner may pursue a targeted
examination
or
market analysis of the unexamined area pursuant to this statute.
(f)
The commissioner’s determination under subsection (d) is discretionary with the
commissioner
and is not subject to appeal.
(g)
Subject to a determination under subsection (d), if a market conduct
examination
conducted
by another state results in a finding that an insurer should modify a specific
practice or
procedure,
the commissioner shall accept documentation that the insurer has made a similar
modification
in the state, in lieu of initiating a market conduct action or examination
related to
that
practice or procedure. The commissioner may require other or additional
practice or
procedure
modifications as are necessary to achieve compliance with specific state laws
or
regulations,
which differ substantially from those of the state that conducted the
examination.
27-71-5.
Market analysis procedures. – (a)(1) The commissioner shall gather
information
as deemed necessary from data currently available, as well as surveys and required
reporting
requirements, information collected by the NAIC and a variety of other
objective
sources
in both the public and private sectors including law enforcement inquires.
(2)
Such information, when collected, shall be analyzed in order to develop a
baseline
understanding
of the marketplace and to identify for further review insurers and/or practices
that
deviate
significantly from the norm or that may pose a potential risk to the insurance
consumer.
The commissioner
shall use the NAIC Market Regulation Handbook as one resource in
performing
this analysis (or procedures, adopted by regulation, that are substantially
similar to the
foregoing
NAIC product).
(3)
The commissioner shall perform the analysis described under this section by:
(i)
Identifying key lines of business for systematic review;
(ii)
Identifying companies for further analysis based on available information.
(b)
If the analysis compels the commissioner to inquire further into a particular
insurer or
practice,
the following continuum of market conduct actions may be considered prior to
conducting
a targeted, on-site market conduct examination. The action selected shall be
made
known
to the insurer in writing if the action involves insurer participation or
response. These
actions
may include, but are not limited to:
(1)
Correspondence with insurer;
(2)
Insurer interviews;
(3)
Information gathering;
(4)
Policy and procedure reviews;
(5)
Interrogatories;
(6)
Review of insurer self-evaluation (if not subject to a privilege of
confidentiality) and
compliance
programs, including membership in a best-practice organization; and
(7)
Desk examinations.
(c)
The commissioner shall select a market conduct action that is efficient for the
department
of business regulation and the insurer, while still protecting the insurance
consumer.
(d)
The commissioner shall take those steps reasonably necessary to eliminate
requests
for
information that duplicate information provided as part of an insurer’s annual
financial
statement,
the annual market conduct statement of the National Association of Insurance
Commissioners,
or other required schedules, surveys, or reports that are regularly submitted
to the
commissioner,
or with data requests made by other states if that information is available to
the
commissioner,
unless the information is state specific, and coordinate market conduct actions
and
findings
with other states.
(e)
Causes or conditions, if identified through market analysis, that may trigger a
target
examination,
included but are not limited to:
(1)
Information obtained from a market conduct annual statement, market survey or
report
of financial examination indicating potential fraud, that the insurer is
conducting the
business
of insurance without a license or is engaged in a potential pattern of
violation of the
general
laws or law enforcement inquiry.
(2)
A number of complaints against the insurer or a complaint ratio sufficient to
indicate
potential
fraud, conducting the business of insurance without a license, or a potential
pattern of
unfair
trade practice in violation of the general laws. For the purposes of this
section, a complaint
ratio
shall be determined for each line of business.
(3)
Information obtained from other objective sources, such as published
advertising
materials
indicating potential fraud, conducting the business of insurance without a
license, or
evidencing
a potential pattern of unfair trade practice in violation of the general laws.
(4)
Patterns of violations of the general laws and administrative regulations
promulgated
thereunder
that cause consumer harm.
27-71-6.
Protocols for market conduct actions. – (a) Market conduct actions
taken as a
result
of a market analysis shall focus on the general business practices and
compliance activities
of
insurers, rather than identifying infrequent or unintentional random errors
that do not cause
consumer
harm.
(b)(1)
The commissioner is authorized to determine the frequency and timing of such
market
conduct actions. The timing shall depend upon the specific market conducted
action to be
initiated,
unless extraordinary circumstances indicating a risk to consumers require
immediate
action.
(2)
If the commissioner has information that more than one insurer is engaged in
common
practices
that may violate statute or regulations, he or she may schedule and coordinate
multiple
examinations
simultaneously.
(c)
The insurer shall be given an opportunity to resolve such matters that arise as
a result
of
market analysis to the satisfaction of the commissioner before any additional
market conduct
actions
are taken against the insurer. If the insurer has modified such practice or
procedure as a
result
of a market conduct action taken by the commissioner of another state, the
commissioner
shall
accept appropriate documentation that the insurer has satisfactorily modified
the practice or
procedure
and made similar modification to such practice or procedure in this state. The
commissioner
may require other or additional practice or procedure modifications as are
necessary
to achieve compliance with specific state laws or regulations, which differ
substantially
from
those of the state conducted examination.
27-71-7.
Protocols for targeted market conduct examinations. – (a) When the
commissioner
identifies through market analysis a pattern of conduct or practice by an
insurer
which
requires further investigation, and less intrusive market conduct actions
identified in
subsection
27-71-5(b) are not appropriate, the commissioner has the discretion to conduct
targeted,
market conduct examinations in accordance with the NAIC Market Conduct Uniform
Examination
Procedures and the Market Regulation Handbook (or procedures, adopted by
regulation,
that are substantially similar to the foregoing NAIC products).
(b)
If the insurer to be examined is not a domestic insurer, the commissioner may
communicate
with and may coordinate the examination with the insurance commissioner of the
state
in which the insurer is organized.
(c)
Concomitant with the notification requirements established in subsection (e) of
this
section,
the commissioner shall post notification on the NAIC Examination Tracking
System, or
comparable
NAIC product as determined by the commissioner, that a market conduct
examination
has been scheduled.
(d)
The commissioner may not conduct a comprehensive market conduct examination
more
frequently than once every three (3) years. The commissioner may decide not to
conduct a
comprehensive
market conduct examination based on market analysis.
(e)(1)
Prior to commencement of a targeted on-site market conducted examination,
market
conduct surveillance personnel shall prepare a work plan and proposed budget.
Such
proposed
budget, which shall be reasonable for the scope of the examination, and work
plan shall
be provided
to the company under examination.
(2)
Market conduct examinations shall, to the extent feasible, utilize desk
examinations
and
data requests prior to a targeted on-site examination.
(3)
Market conduct examinations shall be conducted in accordance with the
provisions
set
forth the in the NAIC Market Regulation Handbook and the NAIC Market Conduct
Uniform
Examinations
Procedures (or procedures, adopted by regulation, that are substantially
similar to
the
foregoing NAIC products).
(4)
Prior to the conclusion of a market conduct examination, the individual among
the
market
conduct surveillance personnel who is designated as the examiner-in-charge
shall
schedule
an exit conference with the insurer.
(f)
Announcement of the examination shall be sent to the insurer and posted on the
NAIC’s
Examination Tracking System (or comparable NAIC product, as determined by the
commissioner)
as soon as possible but in no case later than sixty (60) days before the
estimated
commencement
of the examination, unless extraordinary circumstances indicating a risk to
consumers
requires immediate action. Such announcement to the insurer shall contain:
(1)
The name and address of the insurer(s) being examined;
(2)
The name and contact information of the examiner-in-charge;
(3)
The reason(s) for and the scope of the targeted examination;
(4)
The date the examination is scheduled to begin;
(5)
Identification of any non-insurance department personnel who will assist in the
examination,
if known at the time the notice is prepared;
(6)
A time estimate for the examination;
(7)
A budget and work plan for the examination and identification of reasonable and
necessary
costs and fees that will be included in the bill, if the cost of the
examination is billed to
the
company; and
(8)
A request for the insurer to name its examination coordinator.
(g)
If a targeted examination is expanded beyond the reasons provided to the
insurer in
the
notice of the examination required under this section, the commissioner shall
provide written
notice
to the insurer, explaining the extent of the expansion and the reasons for the
expansion.
The
department shall provide a revised work plan to the insurer before the
beginning of any
significantly
expanded examination, unless extraordinary circumstances indicating a risk to
consumers
require immediate action.
(h)
The commissioner shall conduct a pre-examination conference with the insurer
examination
coordinator and key personnel to clarify expectations thirty (30) days prior to
commencement
of the examination.
(i)
The department shall use the NAIC Standard Data Request (or comparable product,
adopted
by regulation, that is substantially similar to the foregoing NAIC product).
(1)
A company responding to a commissioner’s request to produce information shall
produce
it as it is kept in the usual course of business or shall organize and label it
to correspond
with
the categories in the demand.
(2)_If
a commissioner’s request does not specify the form or forms for producing
electronically
stored information, a company responding to the request must produce the
information
in a form or forms in which the company ordinarily maintains it or in a form or
forms
that are
reasonably usable.
(3)
A company responding to an information request need not produce the same
electronically
stored information in more than one form.
(j)(1)
The commissioner shall adhere to the following timeline, unless a mutual
agreement
is reached with the insurer to modify the timeline:
(a)
The commissioner shall deliver the draft report to the insurer within sixty
(60) days of
the
completion of the examination. Completion of the examination shall be defined
as the date
the
commissioner confirms in writing that the examination is completed.
(b)
The insurer must respond with written comments within thirty (30) days of
receipt of
the
draft report.
(c)
The department shall make a good faith effort to resolve issues and prepare a
final
report
within thirty (30) days of receipt of the insurer’s written comments, unless a
mutual
agreement
is reached to extend the deadline. The commissioner may make corrections and
other
changes,
as appropriate.
(d)
The insurer shall, within thirty (30) days, of receipt of the final report,
file a written
response
to all comments and recommendations contained in the report. The response shall
include
a written plan of how and when the comments and recommendations contained in
the
examination
report will be corrected and/or implemented. For each comment and
recommendation,
the response must include an implementation date and a completion date for
each
corrective action. In lieu of these requirements, the company may submit a
rebuttal to any
comment
or recommendation contained in the examination report. An additional thirty
(30) days
shall
be allowed if agreed to by the commissioner and the insurer.
(2)
The final written and electronic publicly available market conduct report shall
include
the
insurer’s written response and any agreed-to corrections or changes. The
response may be
included
either as an appendix or in text of the examination reports. References to
specific
individuals
by name shall be limited to an acknowledgement of their involvement in the
conduct
of
the examination.
(k)(1)
Upon adoption of the examination report pursuant to subsections 27-13.1-5 (c)
through
(f), the commissioner shall continue to hold the content of the examination
report as
private
and confidential for a period of thirty (30) days, except to the extent
provided in the
paragraph
(k)(2) of this subsection herein. During this time, the report shall not be
subject to
subpoena
and shall not be subject to discovery or admissible in evidence in any private
action.
Thereafter,
the commissioner shall open the report for public inspection, provided no court
of
competent
jurisdiction has stayed its publication. This section may not be construed to
limit the
commissioner’s
authority to use any final or preliminary market conduct examination report,
and
examiner
or company work papers or other documents, or any other information discovered
or
developed
during the course of an examination in the furtherance of any legal or
regulatory action
that
the commissioner, in the commissioner’s sole discretion may deem appropriate.
(2)
Nothing contained in this chapter shall prevent or be construed as preventing the
commissioner
from disclosing the content of an examination report, preliminary examination
report
or results, or any matter relating thereto, to the insurance department of this
or any other
state
or agency of the federal government at any time, provided the agency or office
receiving the
report
or matters relating thereto agrees to hold it confidential and in a manner
consistent with
this
chapter.
(l)
The insurer may appeal the order adopting the examination report in accordance
with
the procedures
set forth in subsection 27-13.1-5(d) and the administrative procedures act,
title 42,
chapter
35.
27-71-8.
Confidentiality requirements. – (a) Except as otherwise provided by
law,
market
conduct surveillance personnel shall have free and full access to all books and
records,
employees,
officers and directors, as practicable, of the insurer during regular business
hours. An
insurer
utilizing a third-party model or product for any of the activities under
examination shall
cause,
upon the request of market conduct surveillance personnel, the details of such
models or
products
to be made available to such personnel. All documents, whether from a
third-party or an
insurer,
including, but not limited to, working papers, third-party models or products,
complaint
logs,
and copies thereof, created, produced or obtained by or disclosed to the
commissioner or
any
other person in the course of any market conduct actions made pursuant to this
chapter, or in
the
course of market analysis by the commissioner of the market conditions of an
insurer, or
obtained
by the NAIC as a result of any of the provisions of this chapter, shall be
confidential by
law
and privileged, shall not be subject to subpoena and shall not be subject to
discovery or
admissible
in evidence in any private civil action. The commissioner will work with an
insurer to
assure
that the insurer’s privacy and information security procedures are not
compromised as a
result
of or in connection with an examination.
(b)
No waiver of any applicable privilege or claim of confidentiality in the
documents,
materials,
or information shall occur as a result of disclosure to the commissioner under
this
section.
(c)
Market conduct surveillance personnel shall be vested with the power to issue
subpoenas
and examine insurance company personnel under oath when such action is ordered
by
the
commissioner.
(d)
Notwithstanding the provisions of paragraph (a) of this subsection, in order to
assist
in
the performance of the commissioner’s duties, the commissioner may:
(1)
share documents, materials, or other information, including the confidential
and
privileged
documents, materials or information subject to paragraph (a), with other state,
federal
and international
regulatory agencies and law enforcement authorities and the NAIC and its
affiliates
and subsidiaries, provided that the recipient agrees to and has the legal
authority to
maintain
the confidentiality and privileged status of the document, material,
communication or
other
information;
(2)
receive documents, materials, communications, or information, including
otherwise
confidential
and privileged documents, materials, or information, from the NAIC and its
affiliates
or
subsidiaries, and from regulatory and law enforcement officials of other
foreign or domestic
jurisdictions,
and shall maintain as confidential or privileged any documents, materials or
information
received with notice or the understanding that it is confidential or privileged
under
the
laws of the jurisdiction that is the source of the document, material or
information;
(3)
enter into agreements governing the sharing and use of information consistent
with
this
subsection; and
(4)
notwithstanding the provisions of this section, no insurer shall be compelled
to waive
any
statutory or common law privilege, but may voluntarily disclose such document
to the
commissioner
in response to any market analysis, market conduct action or examination as
provided
in this chapter.
27-71-9.
Market conduct surveillance personnel. – (a) Market conduct
surveillance
personnel
shall be qualified by education, experience and, where applicable, professional
designations.
The commissioner may supplement the in-house market conduct surveillance staff
with
qualified outside professional assistance if he or she determines that such
assistance is
necessary.
(b)
market conduct surveillance personnel have a conflict of interest, either
directly or
indirectly,
if they are affiliated with the management, have been employed by, or own a
pecuniary
interest
in the insurer subject to any examination under this chapter within the most
recent five (5)
years
prior to the use of the personnel. This section shall not be construed to
automatically
preclude
an individual from being:
(1)
A policyholder or claimant under an insurance policy;
(2)
A grantee of a mortgage or similar instrument on the individual’s residence
from a
regulated
entity if done under customary terms and in the ordinary course of business;
(3)
An investment owner in shares of regulated diversified investment companies; or
(4)
A settlor or beneficiary of a “blind trust” into which any otherwise
permissible
holdings
have been placed.
27-71-10.
Immunity for market conduct surveillance personnel. – (a) No cause
of
action
shall arise nor shall any liability be imposed against the commissioner, the
commissioner’s
authorized
representatives or an examiner appointed by the commissioner for any statements
made
or conduct performed in good faith while carrying out the provisions of this
chapter.
(b)
No cause of action shall arise, nor shall any liability be imposed against any
person
for
the act of communicating or delivering information or data to the commissioner
or the
commissioner’s
authorized representative or examiner pursuant to an examination made under
this
chapter, if the act of communication or delivery was performed in good faith
and without
fraudulent
intent or the intent to deceive.
(c)
A person identified in subsection(a) shall be entitled to an award of
attorneys’ fees
and
costs if he or she is the prevailing party in a civil cause of action for libel,
slander or any
other
relevant tort arising out of activities in carrying out the provisions of this
chapter and the
party
bringing the action was not substantially justified in doing so. For purposes
of this section a
proceeding
is “substantially justified” if it had a reasonable basis in law or fact at the
time that it
was
initiated.
(d)
This section does not abrogate or modify in any way any common law or statutory
privilege
or immunity heretofore enjoyed by any person identified in subsection (a).
27-71-11.
Fines and penalties. – (a) Fines and penalties levied pursuant to
this chapter or
other
provisions of the general laws shall be consistent, reasonable and justified.
(b)
The commissioner shall take into consideration actions taken by insurers that
maintain
membership
in best-practice organizations that exist to promote high ethical standards of
conduct
in
the marketplace, and insurers that self-assess, self-report and remediate
problems detected to
mitigate
fines levied pursuant to this chapter.
27-71-12.
Data collection and participation in national market conduct databases. –
The
commissioner shall collect and report market data to the NAIC’s market
information
systems,
including the complaint database system, the examination tracking system, and
the
regulatory
information retrieval system, or other comparable successor NAIC products as
determined
by the commissioner. In addition to complaint data, the accuracy of insurer-specific
information
reported to the NAIC to be used for market analysis purposes or as the basis
for
market
conduct actions shall be reviewed be appropriate personnel in the department of
business
regulation
and by the insurer.
(a)
Information collected and maintained by the department of business regulation
shall
be
compiled in a manner that meets the requirements of the NAIC.
(b)
After completion of any level of market analysis, prior to further market
conduct
action,
the state shall contact the insurer to review the analysis.
(c)(1)
A company responding to a commissioner’s request to produce information shall
produce
it as it is kept in the usual course of business or shall organize and label it
to correspond
with
the categories in the demand.
(2)
If a commissioner’s request does not specify the form or forms for producing
electronically
stored information, a company responding to the request must produce the
information
in a form or forms in which the company ordinarily maintains it or in a form or
forms
that
are reasonably usable.
(3)
A company responding to an information request need not produce the same
electronically
stored information in more than one form.
(d)
Whether through market analysis, market conduct action, or in response to
another
regulatory
request, any information provided in response to a data call from the
commissioner
shall
be treated as confidential and privileged. It shall not be subject to subpoena
and shall not be
subject
to discovery or admissible in evidence in any private civil action. No waiver
of privilege
or
confidentiality shall occur as a result of responding to such data call.
27-71-13.
Coordination with other states through the NAIC. – The commissioner
shall
share information and coordinate the department of business regulation’s market
analysis
and
examination efforts with other states through the NAIC.
27-71-14.
Additional duties of the commissioner – (a) At least once per year,
or more
frequently
if deemed necessary, the commissioner shall make available in an appropriate
manner
to
insurers and other entities subject to the scope of this chapter information on
new laws and
regulations,
and other information the commissioner deems pertinent to ensure compliance
with
market
conduct requirements. The failure of the commissioner to provide information
shall not
be a
defense for an insurer that fails to comply with any insurance laws of this
state.
(b)
Insurers who wish to receive the information indicated in (a) above shall
provide to
the
commissioner, in a form specified by the commissioner, contact information. The
insurer is
responsible
for keeping that contact information up to date and informing the commissioner
of
any
changes.
(c)
The commissioner shall designate a specific person or persons whose
responsibilities
shall
include the receipt of information from employees of insurers and licensed
entities
concerning
violations of laws, rules or regulations by employers, as defined in this
section. Such
person
or persons shall be provided with proper training on the handling of such
information,
which
shall be deemed a confidential communication for the purposes of this section.
(d)
For any change made by the commissioner to procedures, guidelines, handbooks or
other
work products of the NAIC referenced in this chapter, which materially changes
the way in
which
market analysis, market conducted actions, or market conduct examinations are
conducted,
the
commissioner shall give notice and provide parties with an opportunity for a
public hearing
pursuant
to the administrative procedures act, chapter 42-35.
27-71-15.
Cost of market analysis and examination. – (a) The total cost of
market
analysis
and examinations performed pursuant to this chapter shall be borne by the
companies
analyzed
and/or examined, including the total cost of all persons contracted by the
commissioner
pursuant
to this chapter to supplement in-house staff, in accordance with the provisions
of
subdivision
27-13.1-7(a)(1) or in subsection 27-13.1-4(d) as applicable.
(b)
The commissioner shall maintain active management and oversight of examination
costs
and fees, including costs and fees associated with the use of department
personnel and
examiners
and with retaining qualified contract examiners necessary to perform an
examination.
To
the extent the commissioner retains outside assistance, the commissioner must
have in writing
protocols
that:
(1)
Clearly identify the types of functions to be subject to outsourcing;
(2)
Provide specific timelines for completion of the outsourced review;
(3)
Require disclosure of contract examiners’ recommendations;
(4)
Establish and utilize a dispute resolution or arbitration mechanism to resolve
conflicts
with
insurers regarding examination costs and fees; and
(5)_Require
disclosure of the terms of the contracts with the outside consultants that will
be
used specifically the costs and fees and/or hourly rates that can be charged.
(c)
The commissioner shall review and affirmatively endorse detailed billings from
the
qualified
contract examiner before summary billings are sent to the insurer.
(d)
The commissioner may contract for such qualified contract examiners as the
commissioner
deems necessary, provided that the compensation and per diem allowances paid to
such
contract persons shall not exceed one hundred twenty-five percent (125%) of the
compensation
and per diem allowances for examiners set forth in the guidelines adopted by
the
National
Association of Insurance Commissioners, unless the commissioner demonstrates
that
one
hundred twenty-five percent (125%) is inadequate under the circumstances of the
examination.
The commissioners may make an exception to this requirement for compensation
paid
to contracted persons with unique expertise, however, such compensation shall
be reasonable
and
based on market conditions.
SECTION
2. This act shall take effect upon passage.
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LC02300/SUB B/2
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