Addressing so-called "speed-to-market" issues, the National Association of Insurance Commissioners recently approved a model for a single-entry filing system for insurance rates and forms.The Kansas City, Mo.-based association approved a six-month pilot program for the Coordinated Advertising Rate and Form Review Authority (CARFRA) that will offer insurers a single entry-system consisting of review panels of experienced members from each state, who in turn will offer advisory opinions to the states.

Ten states-Maine, Michigan, New York, Oregon, Pennsylvania and Texas, along with four others to be named by the April 1, 2001 launch date-will take part in a nine-month program that will initially cover only life and health products.

Delicate balance

Just what weight CARFRA recommendations will carry with states is uncertain.

"We remain concerned over the creation of a new bureaucratic entity to regulate rates and forms that may be less accountable," says Don Cleasby, assistant general counsel for the Des Plaines, Ill.-based National Association of Independent Insurers.

But other insurance groups are supportive of the state-based improvements. "The recommendations clearly illustrate the commissioners' support for a move toward a more streamlined approach to the filing process and a more competitive insurance market," says Debra Ballen, executive vice president for the Washington, D.C.-based American Insurance Association.

The American Council of Life Insurers (ACLI), Washington, D.C., called CARFRA a "good first step."

Under the plan, the states would develop standards for basic contract elements such as advertising, disclosure and actuarial requirements administered by the new filing entity.

The NAIC also approved a series of recommendations aimed at improving the speed of rate and form approval by eliminating so-called "desk drawer" rules. Carriers have claimed states have used such rules to interrupt the process arbitrarily and without warning.

Lee Covington, the Ohio insurance commissioner who chaired the state-based improvements panel, believes the task of gaining individual state approval for the proposed changes will be difficult. But he hopes for a snowball effect once a few states pass the model.

Tough road ahead

"I don't expect California or Texas to be approving this model any time soon," Covington adds.

The Working Group also recommended a virtual deregulation of commercial insurance products with an information filing for rates and a so-called file-and-use system for product forms.

While personal lines deregulation was not even considered this time around, industry advocates took heart that the Working Group's mandate was extended for another year.

"It is a discussion some people don't want to have, but we should have," says Roger Schmelzer, regulatory affairs vice president of the National Association of Mutual Insurance Companies, Indianapolis.

Steven Tuckey, associate editor with Insurance Accounting, a Thomson Financial newsletter where this article first appeared.

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