State Regulators Want Insurers to Keep Tabs on Vendors: NAIC Watchers

What You Need to Know

  • A multi-state group has concerns about oversight of short-term health lead generators.
  • Regulators also want to see insurers monitoring their TPAs and underwriters.
  • Some regulators still want to apply suitability rules to life insurance.

Insurance regulators are getting complaints from consumers about calls from firms that generate short-term health insurance leads.

Michael Rohan, a lawyer with Locke Lord LLP, talked about that issue Wednesday, during a webinar on the National Association of Insurance Commissioners’ spring national meeting. The NAIC held the meeting online, from April 7 through April 14.

Rohan said one thing he noticed was Trinidad Navarro, the Delaware insurance commissioner, and Frank Pyle, another Delaware regulator, talking about concerns about short-term health insurance marketers.

“If you have a third party doing any kind of activity for you, whether they’re licensed or unlicensed, you’re ultimately answerable to the regulators for that,” Rohan said.

Some regulators want to review existing NAIC models, and those reviews could eventually lead to new kinds of oversight of lead generators, Rohan said.

Paige Waters, a Locke Lord partner, said regulators also are  looking at how insurers monitor third party administrators, managing general underwriters and other types of business associates.

“The insurance regulators are really holding the insurance companies responsible for their third-party vendors,” Waters said.

Suitability

Waters and Rohan also talked about what they’re hearing about “suitability,” or efforts to make sure that insurers and financial professionals are selling products that appear to suit the purchasers’ needs.

Traditionally, the NAIC and its member insurance regulators have applied suitability rules to annuity sales efforts.

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