New York - A National Association of Insurance Commissioners personal lines working group expressed mixed feelings recently concerning a draft proposal that would authorize insurers to ignore current filed rates and competitively bid on applicants seeking coverage thorough a proposed electronic insurance exchange system. The "Alternative Recommendation for a Pilot Project Testing Pricing Freedom" draft, which was presented via conference call on February 22 to the Personal Lines Market Regulatory Framework Working Group, is based on the use of a technology platform called the "Insurance Exchange," sources at NAIC confirmed. The insurance exchange technology, first publicized by the Council of Insurance Agents and Brokers and reported in Insurance Networking News, March 2007, p. 6), is designed to streamline the underwriting process, says the NAIC draft proposal.  The premise of the technology is to enable an insurance producer to complete a single application for a variety of insurance products and to submit that single application to multiple insurers. Insurers respond with a quote if they are interested in the risk. Once the applicant selects the insurer, the producer uses the insurance exchange to inform the insurer and the insurer issues the policy to the applicant. According to the draft proposed to the NAIC Working Group, which functions under the auspices of the NAIC's Speed to Market Committee, "In exchange for providing easy access to multiple quotations, the insurers could be offered pricing freedom through a pilot project that is enabled by interested insurance regulators."  The proposal states that participating states use discretionary authority contained in current rating laws to enable a pilot project that: *Applies to personal auto insurance and homeowner insurance coverages (other products could be added); *Authorizes insurers to ignore current filed rates and competitively bid on applicants seeking coverage thorough the electronic insurance exchange system; *Allows an insurance producer selected by the applicant to assist the applicant with completion of a single application that is submitted through the system to all interested insurers; *Requires insurers to disclose coverage terms and conditions to the applicant, through the insurance producer, along with the competitive bid detailing the cost for the coverages requested by the applicant; *Provides insurance regulators with statistical information needed to evaluate whether the pricing freedom is providing applicants with sufficient information and broad selection among a variety of insurers and insurance products; and  *Leads to a formal evaluation of the success or failure of the pilot project by participating states. The introduction of the draft, says Working Group chair D. David Parsons, Deputy Commissioner, State of Alabama Department of Insurance, was merely that:  a simple introduction to the Working Group of the topic as "floating option" for possible consideration for a larger agenda of "developing a system that would be less intrusive, and that would allow carriers to get their products out to consumers in a more efficient manner." "We didn't have an official vote count or even a quorum," Parsons told INN, "but we did hear a number of states express disapproval [about the pilot], and a few that expressed positive feedback." Parsons attributes the disparate responses to the insurance industry's culture. "In some ways state regulation is cumbersome to the industry," he said. "There are so many diverse opinions. Our working group's charge is to try to improve that... get to the public more efficiently... at less cost to them and with good protection." Parsons admitted that the industry faces several large hurdles, including differences in filing issues, licensing issues and more.  "There is a lot to be worked out," he said. "But this is a good group and they are passionate about their positions. We would like to see, at a minimum, flex rating come out of this," he said.   Source: National Association of Insurance Commissioners   

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