NAIC Group Defines ‘Accelerated Underwriting’ Over Industry Protests

By John Hilton

A state regulator group reversed course today and approved a definition of accelerated underwriting, and related data elements, after a torrent of criticism.

The definition and data elements move on for consideration Thursday by the Market Conduct Annual Statement Blanks working group. If the criteria passes a further vote by the MCAS parent committee later this summer, accelerated underwriting data would be on track for 2023 reporting.

It took a flood of criticism from consumer groups to keep that timeline on track after the National Association of Insurance Commissioners postponed the effort last week. After consumer representatives blasted the decision to skip a June 1 deadline, regulators responded with today's hastily called meeting.

Led by the American Council of Life Insurers, industry groups were not pleased with the about face.

"We just want to object to the lack of due process," said Rikki Pelta, associate counsel for ACLI. "We weren’t really given time to make a comment on the final proposal."

Work In Progress

An NAIC working group has been working on the definitions and data elements for months for incorporation by the MCAS. Created in 2002, the MCAS provides regulators with a uniform system of collecting market-related information to help states monitor the market conduct of companies.

MCAS created a "subject matter expert" drafting group to work through the data and provide recommendations. The SME group completed a draft proposal definition of accelerated underwriting for MCAS reporting. The MCAS working group had intended to adopt data elements and a definition by a June 1 deadline.

That changed last week when the NAIC announced that it would not meet the deadline and accelerated underwriting reporting would be delayed by another year.

Birny Birnbaum, director of the Center for Economic Justice, claimed the ACLI, unable to stymie the subject matter experts, went to a different group, the Accelerated Underwriting Working Group, and got them involved in order to slow down the process.

Consumer representatives are most concerned about questionable data sources that fall outside "the disclosure and consumer protection provisions of the Fair Credit Reporting Act," as the Center for Economic Justice wrote in a letter this week.

These data sources include consumer credit data, social media, facial analytics and more, Birnbaum said.

"While accelerated underwriting holds the promise of faster decision making and broader access, the use of black-box algorithms with little or no regulatory oversight also raises the potential for unfair and unfairly discriminatory treatment of applicants and policyholders," Birnbaum wrote.

Tentative Definition

The subject matter expert group will send this definition to the MCAS Blanks Working Group:

Accelerated Underwriting: For purposes of MCAS reporting, accelerated underwriting means applying predictive modeling in the underwriting or pricing of life insurance using (in whole or in part) non-medical data obtained other than consciously provided by the applicant or policyholder.

Rebecca Rebholz, chair of the MCAS Blanks group, reminded industry objectors that there is still time to comment and potentially change this definition.

If the MCAS Blanks group adopts this definition and the data elements, it goes to the parent Market Regulation and Consumer Affairs Committee for one last vote by an Aug. 1 deadline. This timeline will enable insurers to begin collecting 2022 accelerated underwriting data in time for 2023 reporting.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.