Draft Pending AdoptionAttachment OneDraft: 8/23/21Market Regulation and Consumer Affairs (D) CommitteeColumbus, OhioAugust 16, 2021The Market Regulation and Consumer Affairs (D) Committee met in Columbus, OH, Aug. 16, 2021. The following Committeemembers participated: Barbara D. Richardson, Chair (NV); Sharon P. Clark, Vice Chair (KY); Alan McClain (AR); Evan G.Daniels (AZ); Trinidad Navarro (DE); Dana Popish Severinghaus represented by Erica Weyhenmeyer (IL); Chlora LindleyMyers and Cynthia Amann (MO); Chris Nicolopoulos (NH); Jon Godfread (ND); Carter Lawrence (TN); Jonathan T. Pike(UT); and Michael S. Pieciak (VT). Also participating were: Damion Hughes (CO); Elizabeth Kelleher Dwyer (RI); MikeKreidler and John Haworth (WA); and Rebecca Rebholz (WI).1.Adopted its July 27 MinutesThe Committee met July 27 and took the following action: 1) adopted it Spring National Meeting minutes; 2) adopted revisedcharges for the Antifraud (D) Task Force; 3) adopted the short-term, limited-duration Market Conduct Annual Statement(MCAS) data call and definitions; 4) adopted the Travel Insurance MCAS data call and definitions; 5) adopted digital claimsdata in the private passenger auto and homeowners data call and definitions; and 6) heard presentations from a state insuranceregulator, an NAIC funded consumer representative, and an industry trade representative on the benefits and challenges ofcollecting market conduct data annually on a transactional level.Commissioner Clark made a motion, seconded by Commissioner Godfread, to adopt the Committee’s July 27 minutes(Attachment One). The motion passed unanimously.2.Heard a Presentation from the UConn School of Law on Claim Optimization and the Insurance PromisePeter Kochenburger (UConn School of Law) said the insurance promise includes insurers paying the full value of coveredclaims without exceeding the policy limits. He noted there are disparities in knowledge and economic power between insurersand most insureds. He said the insurance company cannot use the claim process to rewrite the policy to leverage lower paymentsthan the value of what the claim is worth.Mr. Kochenburger said artificial intelligence (AI) has provided insurers with the potential to evaluate the willingness of insuredsor claimants to accept values less than the fair and equitable amount. He said this would violate the Unfair Claims SettlementPractices Act (#900). While Mr. Kochenburger admitted that it is unknown if claim optimization is occurring, he said it is usedin other consumer transactions; it has been used in underwriting for price optimization; and the marketing by InsurTech vendorssuggests this is being built into InsurTech tools. Mr. Kochenburger encouraged state insurance regulators to determine theextent of use of predictive analytics in claim settlements and require insurers to report on the algorithmic models used in claimhandling.Angela Gleason (American Property Casualty Insurance Association—APCIA) said the term “claim optimization” isleveraging the negative connotations of price optimization to imply consumers are being harmed. She said insurance companiesgo above and beyond to treat their insureds and claimants fairly. She said consumers are always encouraged to question howclaims are valued by the insurance company and always have the recourse to shop for other insurance.Birny Birnbaum (Center for Economic Justice—CEJ) said shopping for other insurance is not an option after filing a claim. Heasked if the implication of claim optimization is that insureds in similar situations are being treated differently according tofactors unrelated to the claim. Mr. Kochenburger said that is correct. Mr. Birnbaum also asked if a publicly owned insurancecompany would be failing its investors if it did not use claim optimization. Mr. Kochenburger said that was the case becausethe company would be operating illegally if it did do so and that was not in the best interest of investors. Finally, Mr. Birnbaumasked if the collection of more granular data would assist state insurance regulators in monitoring and assessing the use ofclaim settlement models in claim settlements. Mr. Kochenburger said it would. He noted that it is not easy to evaluate whethera claim is settled fairly and that there are always good faith disputes, so the more granular data that is available, the better.Erica Eversman (Automotive Education & Policy Institute—AEPI) also said the ability to shop around for other insurancecoverage is not an option for a consumer after the claim. She noted that the three major claim evaluation vendors are beholdento the insurance companies. 2021 National Association of Insurance Commissioners1

Draft Pending Adoption3.Attachment OneAdopted its Task Force and Working Group ReportsCommissioner Richardson said the Market Information Systems (D) Task Force adopted a proposal for coding changes to theRegulatory Information Retrieval System (RIRS). She said when the Committee votes to approve the Working Group and TaskForce reports, it will also be voting to adopt the RIRS coding changes proposal. She also noted that the Market Actions (D)Working Group and the Advisory Organization Examination Oversight (D) Working Group met in regulator-to-regulatorsession due to the nature of their discussions focusing on specific company practices. She said there are no written or verbalreports for these two working groups.a.Antifraud (D) Task ForceCommissioner Navarro said the Antifraud (D) Task Force met July 26 and took the following action: 1) heard an update fromthe Antifraud Education Enhancement (D) Working Group. He said the Working Group held a webinar on Feb. 11 regardingthe mobile capabilities CARCO can provide state departments of insurance (DOIs) to assist in fighting insurance fraud. He saidthe Working Group also conducted an insurance fraud investigator safety course on June 2.Commissioner Navarro said Task Force also received a report from the Antifraud Technology (D) Working Group. He said theWorking Group advised that the adopted revisions to the Antifraud Plan Guideline (#1690) was the first step in its charge tocreate an antifraud plan repository that will be used by insurers to create and store an electronic fraud plan for distribution tostates. He said the Working Group formed a subject matter expert (SME) group to create a template for industry to use whencreating their antifraud plans. The SME group expects to complete its work by October.Commissioner Navarro said the Task Force received an update on the NAIC Online Fraud Reporting System (OFRS) redesign.He said beta testing began with a small group of state insurance fraud directors. The beta testing will be opened to additionalstate insurance regulators and industry representatives to finalize the testing period.Commissioner Navarro said the Task Force also received reports from the National Insurance Crime Bureau (NICB) and theCoalition Against Insurance Fraud (CAIF).b.Market Information Systems (D) Task ForceCommissioner Kreidler said the Market Information Systems Task Force met July 28 and took the following action: 1) adoptedits Spring National Meeting minutes; and 2) reviewed the status of outstanding User System Enhancement Requests (USER).Commissioner Kreidler said the Task Force also heard the report of the Market Information Systems Research and Development(D)Working Group. He said the Working Group is researching the potential of incorporating AI into the NAIC MarketInformation Systems (MIS). The Working Group heard a presentation from NAIC financial regulation staff regarding theirtesting of the use of AI to construct predictive models of insolvency risk, and it also heard from CEJ regarding how AI can beused in market analysis. Commissioner Kreidler said the Working Group’s next step is to form an SME group to developrecommendations for incorporating AI into the MIS.Commissioner Kreidler said that prior to the Spring National Meeting, the Market Information Systems Research andDevelopment (D) Working Group adopted RIRS coding changes proposal. He said the RIRS coding changes include: 1) a newfield to distinguish routine administrative actions from actions that are a result of an infraction or financial impairment; 2) anew field to link related to RIRS records; 3) a new Line of Business field; and 4) revisions to the Origin of Action, Reason forAction, and Disposition for Action codes to create a more logical data structure. Commissioner Kreidler said the Task Forceadopted the proposal.c.Producer Licensing (D) Task ForceSuperintendent Dwyer said the Producer Licensing (D) Task Force met Aug. 4 and adopted its March 21 minutes. She alsosaid the Task Force discussed state implementation of online examinations with 40 jurisdictions offering online examinationsfor producer licensing. She said this is a significant change as only Washington offered online examinations prior to theCOVID-19 pandemic. She said states are reporting similar pass rates for online and in-person examinations and thatapproximately 35% to 40% of examinations are now taken through the online format. Notably, she said Washington reportedthat 80% of its examinations are administered through the online format. Superintendent Dwyer said the Task Force alsodiscussed security concerns with online examinations and will be obtaining additional information from the examinationvendors on what percentage of online examinations had security concerns. 2021 National Association of Insurance Commissioners2

Draft Pending AdoptionAttachment OneSuperintendent Dwyer said the Task Force discussed the pending referral from the Special (EX) Committee on Race andInsurance regarding the elimination of bias in producer licensing examinations. She said examination vendors have beensolicited on the processes they follow to eliminate bias in examinations. She said the Task Force is also reaching out tocontinuing education (CE) providers and will have additional discussions on this topic at its next meeting.Superintendent Dwyer said the Task Force discussed the review of the NAIC’s Guidelines for State Insurance Regulators tothe Violent Crime Control and Law Enforcement Act of 1994 and the need to revise the guidelines to make them more usefulin the state’s day-to-day review of 1033 waiver requests.Superintendent Dwyer said the Task Force also heard an update on a new program in Pennsylvania for prospective insuranceagents with criminal records and how their specific convictions, history, and background may affect their ability to successfullyobtain a producer license. He said the Pennsylvania program allows a person with a criminal conviction to provide thisinformation to the Pennsylvania DOI through an electronic portal. The DOI then reviews the information and provides nonbinding feedback to the prospective applicant on how the criminal conviction might affect their ability to obtain an insuranceproducer license before the applicant spends the time and effort with pre-licensing education and taking a producer licensingexam.Superintendent Dwyer said the Task Force briefly discussed the draft procedure for amending NAIC Uniform ProducerLicensing Applications. He said the procedures are being developed to ensure the consideration of changes to the uniformapplications support the NAIC members’ goal of providing stable applications and encourage the use of electronic technologyfor licensing. She said the Task Force is seeking comments on the procedures through Sept. 3.Finally, Superintendent Dwyer said the Task Force discussed the status of the Producer Licensing Uniformity (D) WorkingGroup and the Uniform Education (D) Working Group. She noted that the chair position for the Producer Licensing Uniformity(D) Working Group remains open and that the leadership for both Working Groups continues to be in a state of flux.d.Market Conduct Examination Guidelines (D) Working GroupMr. Hughes said the Market Conduct Examination Guidelines (D) Working Group met June 10 and took the following action:1) reviewed and discussed its 2021 charges; 2) prioritized potential Working Group tasks; and 3) identified NAIC models actsand model laws adopted in 2020. Mr. Hughes said the Working Group also asked for state insurance regulators to volunteer toreview the adopted model laws and model acts to determine whether revisions to the corresponding sections of the NAICMarket Regulation Handbook are warranted.Finally, Mr. Hughes said the Working Group discussed a new title insurance in-force policy standardized data request (SDR)for inclusion in the Market Regulation Handbook.e.Market Analysis Procedures (D) Working GroupMr. Haworth said the Market Analysis Procedures (D) Working Group met July 1 and took the following action: 1) adopted itsSpring National Meeting minutes; and 2) continued its discussion on the training needs for market analysts. He said ideasinclude: 1) having monthly analysis groups to share techniques and tips; 2) leveraging the materials from the NAIC’s MarketAnalysis Techniques online course and adapt them for new analysts; 3) creating more and better tutorials and help in i-Site ;4) incorporating Tableau visuals into the Market Analysis Review System (MARS) and other market analysis tools; and 5)providing more training on analyzing financial information and MCAS ratios.Mr. Haworth said the Working Group also opened discussions on the next line of business to add to the MCAS and is askingfor written and verbal suggestions. Additionally, Mr. Haworth said the Working Group began discussions on its members’initial impressions of the current MCAS submissions. He said the conversations are on a high-level aggregated level.Finally, Mr. Haworth said the Working Group considered whether MCAS submissions should be required to be reported bythe residency of the policyholder or by where the policy was issued. He said the current MCAS instructions specify the datashould be reported in the same manner as the company reports its financial annual statement. He the Working Group agreed tocontinue with these instructions without amendment. 2021 National Association of Insurance Commissioners3

Draft Pending Adoptionf.Attachment OneMarket Conduct Annual Statement Blanks (D) Working GroupMs. Rebholz that since the Spring National Meeting, the Market Conduct Annual Statement Blanks (D) Working Group metfive times.Ms. Rebholz said that during these meetings, the Working Group adopted the travel MCAS data call and definitions and theshort-term, limited-duration (STLD) MCAS data call and definitions on May 25—prior to the June 1 deadline. She said thefirst MCAS due date for the travel MCAS blank will be on April 30, 2023, and the STLD MCAS blank will be June 30, 2023.She said both will cover the 2022 data year.Ms. Rebholz said the Working Group also adopted the addition of digital claim data to the auto and homeowners (HO) MCASblanks. She said these were adopted on June 30. The first due date for the data will be April 30, 2024, covering the 2023 datayear.Ms. Rebholz said the Working Group is continuing its development of accelerated underwriting data elements to the life andannuity MCAS blanks. She said the Working Group is monitoring the work of the Accelerated Underwriting (A) WorkingGroup so it can coordinate the MCAS definition of accelerated underwriting with the definition they adopt.Ms. Rebholz said the Working Group has spent considerable time drafting revisions to the definition of “lawsuit” in the variousMCAS blanks. She said this includes adding non-claims-related lawsuits to the auto and HO MCAS blanks and editing thedefinition to conform to the type of product being reported on. She said that due to the continued discussions, the WorkingGroup postponed collection of non-claims-related lawsuit information to the 2023 data year. Ms. Rebholz also said that due tothe complexity of the lawsuit reporting issues, the Working Group formed an SME drafting group to consider options to presentto the Working Group. She said the SME group is also tasked with considering the best way to collect vendor information onthe digital claims data elements.Finally, Ms. Rebholz said that because the STLD MCAS blank was adopted by the Committee in July, the Working Group willcontinue the development of MCAS blanks for other health products not covered in the current health or STLD MCAS datacall and definitions.g.Privacy Protections (D) Working GroupMs. Amann said that since the Spring National Meeting the Privacy Protections (D) Working Group met July 12, June 14, andMay 10.Ms. Amann said that during its May 10 meeting, the Working Group took the following action: 1) adopted its Spring NationalMeeting minutes; 2) reviewed the 2021 NAIC strategy for consumer data privacy protections; 3) discussed the verbal gapanalysis of consumer issues; 4) discussed the draft of the initial privacy policy statement; and 5) requested comments in theform of parameters and examples on the privacy policy statement.Ms. Amann said that during its June 14 meeting, the Working Group took the following action: 1) adopted it May 10 minutes;and 2) discussed the comments received from America’s Health Insurance Plans (AHIP), the Blue Cross and Blue ShieldAssociation (BCBSA), and the Coalition of Health Companies on the privacy policy statement.Ms. Amann said that during its July 12 meeting, the Working Group took the following action: 1) adopted its June 14 minutes;2) received comments from the American Council of Life Insurers (ACLI) about the six consumer privacy rights identified inthe NAIC strategy for consumer data privacy protections; 3) heard a presentation from NAIC funded consumer representativeson the consumer perspective on consumer data privacy rights; 4) requested comments on the private policy statement.Ms. Amann said the privacy policy statement template located on the Working Group web page is being combined with thereceived comments into a draft for exposure. She said there will be an accelerated review by the Working Group.Mr. Birnbaum asked how the Working Group will be addressing the data ownership issue referred to the Working Group bythe Innovation and Technology (EX) Task Force. Ms. Amann said the Working Group first needs to receive permission fromthe Committee before it can act on the referral.Commissioner Godfread made a motion, seconded by Commissioner Navarro, to adopt the following reports, including theproposal for coding changes to the RIRS (Attachment Two) adopted by the Market Information Systems (D) Task Force: 2021 National Association of Insurance Commissioners4

Draft Pending AdoptionAttachment One1) Antifraud (D) Task Force; 2) Market Information Systems (D) Task Force; 3) Producer Licensing (D) Task Force; 4) MarketConduct Examination Guidelines (D) Working Group (Attachment Three); 5) Market Analysis Procedures (D) Working Group(Attachment Four); 6) Market Conduct Annual Statement Blanks (D) Working Group (Attachment Five); and 8) PrivacyProtections (D) Working Group (Attachment Six). The motion passed unanimously.Having no further business, the Market Regulation and Consumer Affairs (D) Committee adjourned.W:\National Meetings\2021\Summer\Cmte\D\Draft 8-D Cmte.dotx 2021 National Association of Insurance Commissioners5

Attachment TwoDraft: 11/17/21Adopted by the Executive (EX) Committee and Plenary, Dec. XX, 2021Adopted by the Market Regulation and Consumer Affairs (D) Committee, Dec. XX, 20212022 Proposed ChargesMARKET REGULATION AND CONSUMER AFFAIRS (D) COMMITTEEThe mission of the Market Regulation and Consumer Affairs (D) Committee is to monitor all aspects of the market regulatoryprocess for continuous improvement. This includes market analysis, regulatory interventions with companies, and multijurisdictional collaboration. The Committee will also review and make recommendations regarding the underwriting andmarket practices of insurers and producers, as those practices affect insurance consumers, including the availability andaffordability of insurance.Ongoing Support of NAIC Programs, Products or Services1.The Market Regulation and Consumer Affairs (D) Committee will:A. Monitor the centralized collection and storage of market conduct data, national analysis, and reporting at the NAIC,including issues regarding the public availability of data.B. Monitor and assess the current process for multi-jurisdictional market conduct activities and provide appropriaterecommendations for enhancement, as necessary.C. Evaluate all data currently collected in the NAIC Market Information Systems (MIS) and considered confidential todetermine what, if any, can be made more widely available.D. Oversee the activities of the Antifraud (D) Task Force.E. Oversee the activities of the Market Information Systems (D) Task Force.F. Oversee the activities of the Producer Licensing (D) Task Force.G. Monitor the underwriting and market practices of insurers and producers, as well as the conditions of insurancemarketplaces, including urban markets, to identify specific market conduct issues of importance and concern. Holdpublic hearings on these issues at the NAIC national meetings, as appropriate.H. In collaboration with other technical working groups, discuss and share best practices through public forums to addressbroad consumer concerns regarding personal insurance products.I. Coordinate with the International Insurance Relations (G) Committee to develop input and submit comments to theInternational Association of Insurance Supervisors (IAIS) and/or other related groups on issues regarding marketregulation concepts.J. Coordinate with the Health Insurance and Managed Care (B) Committee to provide policy recommendations regardinguniform state enforcement of the federal Affordable Care Act (ACA).K. Review the “Best Practices and Guidelines for Consumer Information Disclosures” (adopted October 2012) andupdate, as needed.2.The Advisory Organization Examination Oversight (D) Working Group will:A. Revise the protocols, as necessary, for the examination of national or multistate advisory organizations (includingrating organizations and statistical agents) to be more comprehensive, efficient, and possibly less frequent than thecurrent system of single-state exams. Solicit input and collaboration from other interested and affected committeesand task forces.B. Monitor the data reporting and data collection processes of advisory organizations (including rating organizations andstatistical agents) to determine if they are implementing appropriate measures to ensure data quality. Report the resultsof this ongoing charge, as needed.C. Actively assist with and coordinate multistate examinations of advisory organizations (including rating organizationsand statistical agents).3.The Market Actions (D) Working Group will:A. Facilitate interstate communication and coordinate collaborative state regulatory actions.4.The Market Analysis Procedures (D) Working Group will:A. Recommend changes to the market analysis framework based on results over the past five years, including the currentset of Level 1 and Level 2 questions.B. Discuss other market data collection issues and make recommendations, as necessary.C. Consider recommendations for new lines of business for the Market Conduct Annual Statement (MCAS). 2021 National Association of Insurance Commissioners1

Attachment Two5.The Market Conduct Annual Statement Blanks (D) Working Group will:A. Review the MCAS data elements and the “Data Call and Definitions” for those lines of business that have been ineffect for longer than three years and update them, as necessary.B. Develop an MCAS blank to be used for the collection of data for additional lines of business, where appropriate.6.The Market Conduct Examination Guidelines (D) Working Group will:A. Develop market conduct examination standards, as necessary, for inclusion in the Market Regulation Handbook.B. Monitor the adoption and revision of NAIC models and develop market conduct examination standards to correspondwith adopted NAIC models.C. Develop updated standardized data requests, as necessary, for inclusion in the Market Regulation Handbook.D. Develop uniform market conduct procedural guidance (e.g., a library, depository or warehouse with market conductexamination templates, such as an exam call letter, exam exit agenda, etc.) for inclusion in, or for use in conjunctionwith, the Market Regulation Handbook.E. Coordinate with the Innovation, Cybersecurity and Technology (H) Committee to develop market conduct examinerguidance for the oversight of regulated entities’ use of insurance and non-insurance consumer data and models usingalgorithms and artificial intelligence (AI).F. Discuss the effectiveness of a group’s supervision of market conduct risks and develop examination proceduralguidance, as necessary.G. Discuss the role of market conduct examiners in reviewing insurers’ corporate governance as outlined in the NAIC’sCorporate Governance Annual Disclosure Model Act (#305) and Corporate Governance Annual Disclosure ModelRegulation (#306).7.The Market Regulation Certification (D) Working Group will:A. Develop a formal market regulation certification proposal for consideration by the NAIC membership that providesrecommendations for the following: 1) certification standards; 2) a process for the state implementation of thestandards; 3) a process to measure the states’ compliance with the standards; 4) a process for future revisions to thestandards; and 5) assistance for jurisdictions to achieve certification.8.The Privacy Protections (D) Working Group will:A. Review state insurance privacy protections regarding the collection, use and disclosure of information gathered inconnection with insurance transactions and make recommended changes, as needed, to certain NAIC models, such asthe NAIC Insurance Information and Privacy Protection Model Act (#670) and the Privacy of Consumer Financialand Health Information Regulation (#672). (Further direction from NAIC Executive Committee may result in thischarge being moved to the new Innovation, Cybersecurity, and Technology (H) Committee.)D Cmte Proposed 2022 Charges 2021 National Association of Insurance Commissioners2

POLICY IN FORCE STANDARDIZED DATA REQUESTTitle Line of BusinessContents:Attachment ThreeTitle In Force 09-02-21This file should be downloaded from the company system(s) and contain one record for each title policy issued in [applicable state] at any timeduring the examination period.For any fields where there are multiple entries, please repeat field as necessary.Uses:Field Data will be used to determine if the company follows appropriate procedures with respect to the issuance and/or underwriting of title policies in[applicable state] within the scope of the examination. Cross-reference with the claims data file to validate the completeness of the in force file; and Cross-reference to state(s) licensing information to ensure proper agent 101010101010Type Decimals DescriptionATitle agency nameAUnderwriting title insurerANAIC company codeAPolicy prefix (Blank if NONE)APolicy numberAPolicy suffix (Blank if NONE)Type of policy (Presumably an alphabetic character such as O (Owner), M (Mortgagee), L (Lender), SA(Simultaneous), H (Hold Open) Please provide a list to explain any codes usedAPolicy form number as filed with the insurance departmentAIs the policy reissued? (Y/N)AArbitration provision (Y/N)AClosing file numberAProperty type – residential or non-residentialN2 Amount of liability assumedN2 Dollar limit of coverageAFile identifier assigned by agent or company’s issuing office (order number)N2 Sale/Purchase price of subject propertyN2 Loan amountDDate commitment issued [MM/DD/YYYY]DDate transaction closed [MM/DD/YYYY]DEffective date of policy [MM/DD/YYYY]DDate policy issued/delivered to insured [MM/DD/YYYY]DDate deed is recorded [MM/DD/YYYY] 2021 National Association of Insurance CommissionersPage 1 of 3

Attachment ThreeTitle In Force 09-02-21Field 92050Type Decimals DescriptionDDate deed was presented for recording [MM/DD/YYYY]DDisbursement date [MM/DD/YYYY]Company internal agent, CSR, or agency identification code Please provide a list to explain any codesAusedANational producer numberAFirst name of agentAMiddle name of agentALast name of agent (or agency name, if applicable)AStatus of agent, CSR or agency appointment (active, inactive, terminated, etc.)AAgent’s, CSR’s or agency’s street addressAAgent’s, CSR’s or agency’s cityAAgent’s, CSR’s or agency’s state abbreviationAAgent’s, CSR’s or agency’s ZIP codeN2 Base premium charged for the policy per company filed rates as defined by [Insert statutory citation here]AList endorsements attached to the policy Please provide a list to explain any codes usedN2 Endorsement premiumType of policy discount (Employee, military, charitable organization, etc.) If codes are used, provide aAlist of codes along with their meaningsN2 Discount (percentage or amount)N2 Amount of premium retained by the agent or agencyN2 Premium remitted by agency to insurerAClosing protection letter (Y/N)N2 Closing protection feeN2 Title service chargesN2 Closing chargesDDate premium remitted to insurer [MM/DD/YYYY]AFull name of lender insured by policy (if applicable)AFirst name of owner insured by policy (if

Angela Gleason (American Property Casualty Insurance Association—APCIA) said the term "claim optimization" is leveraging the negative connotations of price optimization to imply consumers are being harmed. She said insurance companies go above and beyond to treat their insureds and claimants fairly.