1. SEMINAR NAIC/ASSAL/SVS REGULATION & SUPERVISION OF MARKET CONDUCT © 2014 National Association of Insurance Commissioners Market Conduct Examination Standards

2. INTRODUCTION  Cornerstone of Market Regulation  Started in the 1980s  Formalized prior to Market Analysis  Require the most resources  Are the most intrusive 2

3. KEY MARKET REGULATION ROLES  Chief Examiner (Regulator)  Examiner in Charge (Regulator or Contractor)  Company Coordinator (Company) 3

4. CASE STUDY 4

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6. THE DECISION TO CONDUCT AN EXAMINATION  Advantages  In-depth knowledge of the company  Ability to communicate face to face  Ability to access information without a filter  Disadvantages  Use of Regulator Resources  Use of Company Resources  Much higher cost than other continuum options  Opportunity Costs 6

7. THE CHIEF EXAMINER’S TASKS  Notify the Company with a “Call Letter”  Select the Examiner In Charge (EIC)  Provide Information to EIC 7

8. THE EXAMINER IN CHARGE’S TASKS  Contact the Company to inquire about the Company Coordinator  Provide Coordinator’s Handbook  Expectations of the Coordinator  Logistical requirements of the exam  Request initial items from Company  Enter information in the NAIC’s Examination Tracking System (ETS)  Prepare the Exam Team 8

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10. INITIAL TASKS AT THE COMPANY  Conduct Opening Meeting  Examination Overview  Importance of coordinator’s role  How to handle Formal Requests  How to handle Criticisms  Finalize Examination Plan and Tracking Method  Validate Information Received  Conduct Sampling of files 10

11. CONTINUOUS TASKS DURING EXAM  Submit Formal Requests  Submit Criticisms  Ensure proper documentation  Send status updates to the Chief Examiner 11

12. CONDUCT AREAS OF REVIEW  Company Operations and Management  Complaint Handling  Marketing and Sales  Underwriting and Rating  Policyholder Service  Claims  Producer Licensing 12

13. COMPANY OPERATIONS/MANAGEMENT  Purpose  To provide examiners an overview of the Company and how it conducts its business in the marketplace.  Techniques  Review a variety of corporate documents, reports, procedures and processes.  Tests and Standards 13

14. MARKETING AND SALES  Purpose  To evaluate the representations made by the Company to market its products and services to potential consumers and producers.  Techniques  Review market and sales materials and producer training items.  Tests and Standards 14

15. UNDERWRITING AND RATING  Purpose  To evaluate how a Company performs its Underwriting and Rating practices.  Techniques  Review underwriting and rating manuals, processes and a sample of new and renewal policies.  Tests and Standards 15

16. POLICYHOLDER SERVICE  Purpose  To evaluate how a Company responds to the requests of its policyholders regarding premium notices, premium refunds or questions.  Techniques  Review processes and a sample of files.  Tests and Standards 16

17. CLAIMS  Purpose  To provide an overview of how the Company treats claimants with the acknowledgment, investigation and settlement of claims.  Techniques  Review claim manuals, processes and a sample of claims, both paid and closed without payment.  Tests and Standards 17

18. COMPLAINT HANDLING  Purpose  To ensure the Company has proper consumer complaint handling procedures and follows them accordingly.  Techniques  Review company procedures, complaint register and a sample of consumer complaints.  Tests and Standards 18

19. PRODUCER LICENSING  Purpose  To provide an overview of the Company’s practices regarding the appointment and termination of its producers.  Techniques  Review company manuals, processes and a sample of producer files.  Tests and Standards 19

20. WRITTEN EXAMINATION REPORT  Summary of Examination Findings  Executive Summary  Basic Information about the Company  Basic Information about the Examination  All Examiner’s Findings 20

21. FINAL TASKS AT THE COMPANY  Conduct Exit Conference  Overview of all findings  Explain next steps in process  Send Information to Chief Examiner 21

22. QUESTIONS/COMMENTS 22