‘Regrettable’: NAIC To Delay Accelerated Underwriting Reporting Until 2024

After nearly 90 minutes of haggling failed to produce anything resembling a consensus, a state insurance regulator group temporarily shelved a plan Thursday to define accelerated underwriting.

The Market Conduct Annual Statement (MCAS) Blanks Working Group met to consider approval of a definition of accelerated underwriting, and related data elements -- both of which were hastily agreed to Tuesday by a "subject matter expert" group.

Instead, the working group punted the definition and data elements, which means accelerated underwriting data collection will be pushed back one year to 2024.

"We need to be really clear and have a better idea of what exactly we're looking at," said Paul Hanson, chief examiner, market conduct exams, the Minnesota Department of Commerce. "And while it may take another year, that's regrettable. But on the other hand, it's better to have a good handle on it rather than just a race forward."

On the other side, Birny Birnbaum, director of the Center for Economic Justice and a consumer representative to the National Association of Insurance Commissioners, said the delay represents a major missed opportunity.

"Many months and hundreds of hours of work went for naught," he said after the meeting. "With this non-action by the regulators, insurers remain unaccountable and consumers remain vulnerable to insurers' use of big data, artificial intelligence and black box algorithms in auto and home insurance claims settlement and life insurance underwriting."

How We Got Here

The MCAS working group set a June 1 deadline to finalize its definitions and data elements in order to complete the entire process in time for 2022 data collection on accelerated underwriting for reporting in 2023.

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.

The first hint of problems arose two weeks ago when the NAIC announced that the working group would not be able to complete its work by June 1. After consumer reps criticized the delay, the MCAS subject matter experts met Tuesday and agreed on a definition, briefly putting the process back on track.

The subject matter expert (SME) group sent 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.

But Rebecca Rebholz, chair of the MCAS Blanks group, noted that the subject matter expert group was far from a consensus on the language.

"Our subject matter expert group did not contain enough regulators to really have a full discussion from the regulator perspective," she said. "I brought it forward simply because we were at an impasse in the subject matter expert group. And we had reached the end of our time."

Several regulators on the Thursday call volunteered to serve on the next iteration of the SME.

Questionable Data Use

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.

Some regulators on Thursday's call questioned why the definition was not more specific on data sets that can be misused. Birnbaum, who was a member of the SME, said the definition is intentionally narrow.

"If you open it up to accelerated underwriting means any type of data used, then everything would be recorded as accelerated underwriting," he explained. "And there would be virtually nothing can be recorded other than accelerated underwriting."

The American Council of Life Insurers opposed the definition and endorsed allowing another working group, the Accelerated Underwriting Working Group, do the work. A spokesman for the trade association said the delay is the best course of action.

“The purpose of MCAS is for regulators to gather data that will help protect consumers. Gathering data based on a definition that is incomplete will not help the regulatory community fulfill this mission," said Whit Cornman, director of media relations for ACLI. "It’s important that the working group allows time for sufficient stakeholder input on the definition of accelerated underwriting and meaningful coordination among the various NAIC workstreams examining this important issue."

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.

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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.