Insurance Commission Research Articles

The Revolving Door and Insurance Solvency Regulation

Solvency regulation of the U.S. insurance industry occurs at the state level and is led by insurance commissioners who wield significant discretion. I construct a novel dataset of the employment history of these commissioners and find 38% of them work in the insurance industry after their term (“revolvers”). Revolvers are more lenient when regulating insurers' solvency along multiple dimensions. Consequently, insurers in revolver-led states over-reported their capitalization during the 2008 financial crisis by up to 10%. Revolvers’ leniency can lead to inflated insurer credit ratings, and consumers can be overpaying up to $27 billion in insurance premiums a year.

APA’s Government, Policy, and Advocacy Update

Back to table of contents Previous article Next article APA & MeetingsFull AccessAPA’s Government, Policy, and Advocacy UpdateSearch for more papers by this authorPublished Online:12 Jan 2021https://doi.org/10.1176/appi.pn.2021.1.36APA’s Department of Government Relations works all year to advocate at the federal and state levels to advance the profession of psychiatry and promote high-quality care for patients. Psychiatric News is starting this regular column to bring you news of APA’s latest advocacy and government relations work.Congress Passes APA-Supported Mental Health Parity Compliance LegislationIn its massive year-end appropriations and COVID relief funding package, Congress passed the Strengthening Behavioral Health Parity Act (HR 7539), for which APA has been advocating for two years. It gives the U.S. Department of Labor (DOL) new powers to regulate and audit health plans to determine if they are in compliance with the 2008 Mental Health Parity and Addiction Equity Act (MHPAEA). President Donald Trump signed the legislation on December 27.The legislation applies to federally regulated ERISA plans as well as state-regulated insurance plans. Among its provisions, the legislation requires plans to perform comparative analyses of their mental health/substance use and medical/surgical benefits and send those analyses to the DOL or a state insurance commissioner in response to complaints or violations. It also requires that Congress receive an annual report identifying plans that are out of compliance with MHPAEA.Congress’s year-end funding package and COVID relief legislation contains several provisions that support mental health programs and initiatives in addition to the new parity law, including: $6 billion for the Substance Abuse and Mental Health Services Administration and $35 million for crisis care and coordination within the Mental Heath Block Grant, as well as increases in funding for several federal agencies that conduct mental health and substance use research.APA Reaches Out to President-elect Biden and Vice President-elect HarrisIn early December, APA CEO and Medical Director Saul Levin, M.D., M.P.A., sent a letter to President-elect Joe Biden and Vice President-elect Kamala Harris, congratulating them on their win and urging them to prioritize responding to the country’s increased demand for psychiatric services. The letter outlined several recommendations for Biden’s first 100 days in office, including improving access to treatment and investing in the mental health system.APA Prepared to Work With States to Introduce Model LegislationAs many states begin their legislative sessions this month, APA is working closely with district branches across the country to protect patient safety and introduce APA’s model legislation.Late last year, APA and its partner organizations finalized model legislation to enforce the holding of the Wit v. UBH decision. The Jim Ramstad Model State Parity Legislation would ensure health plans cover medically necessary care that aligns with practice guidelines and treatment criteria developed specifically by associations like APA. It is similar to legislation that was signed into law in California last year.APA is also working with states to introduce the Psychiatric Collaborative Care model legislation, which would require private insurers to reimburse collaborative care billing codes, and the telehealth model legislation, which would ensure fair reimbursement for psychiatrists who provide telehealth, as well as audio-only service delivery. Half the states have expressed interest in the telehealth model legislation already. APA members interested in learning more can contact APA’s director of state government relations, Erin Berry Philp. ■ ISSUES NewArchived

The COVID-19 Pandemic and Health Insurance Regulation

With projections of costs in the billions for COVID-19 treatments alone, and heightened scrutiny on COVID-19-related health insurance coverage, the National Association of Insurance Commissioners (NAIC) convened in March 2020 to discuss how the industry could best deal with a pandemic. While the ramifications of the COVID-19 event are in their infant stages, it is important to consider the implications such catastrophic risks have on an insurance market. We evaluate state-level changes presented by the NAIC in response to the COVID-19 pandemic and use prior research to offer insight into health insurance in a post-COVID-19 world. This manuscript aims to provide a summary of the NAIC’s current standing during the pandemic, while presenting insight into policy implications regarding regulation in health insurance markets during catastrophic events.

THE EFFECT OF FRAUD ON PROFITABILITY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

The increasing rate of fraud occurrence and poor profitability rate in the listed Deposit Money Banks (DMBs) in Nigeria calls for a research investigation. To unravel the likely connection between fraud and profitability, this study has examined the effect of fraud on the profitability of listed DMBs in Nigeria. To achieve this objective, the study adopted a correlational research design and utilised secondary data extracted from the Nigerian Deposit Insurance Commission (NDIC) and published financial statements of the DMBs. The study focused on 14 listed DMBs for a six-year period (2012-2017). Panel multiple regression technique was used to estimate the model of the study. The findings showed that fraud (proxied by actual loss from fraud and staff involvement in fraud) has a negative and significant effect on profitability (proxied by return on asset) of listed DMBs in Nigeria. In line with the findings, this study has recommended that listed DMBs should establish fraud detection mechanisms which will entail the setting up of an efficient, reliable and functioning fraud detection unit to monitor transactions that may be susceptible to fraud.

Особенности регулирования страховой деятельности в практике банкострахования в Европейском союзе

In the Russian Federation, bancassurance has already become a relatively common type of interactions between banks and their customers in selling insurance, with banks being the main channels for distributing insurance services in exchange for commission. Borrowers are known to be the weaker side of a contract, which leads to banks impose insurance services and commission, which the banks may capitalize on. This indicates a significant issue for the local antitrust and banking regulations. The article describes the expertise in managing these activities in the member countries of the European Union and provides recommendations for a possible legal regulation of insurance and banking activities in Russia.

The Election; The ACA At The Supreme Court.

The new president will put his stamp on the Affordable Care Act as the Supreme Court seems unlikely to invalidate the entire law.

Family history of non-communicable diseases and associations with weight and movement behaviours in Australian school-aged children: a prospective study

ObjectiveTo assess differences in weight status and movement behaviour guideline compliance among children aged 5–12 years with and without a family history of non-communicable diseases (NCDs).DesignProspective.Setting and participantsWomen born between...

Reinsurance, debt capacity and financial flexibility

Prior studies conclude that hedging has a positive effect on firms’ debt capacity; however, in the present study, we argue that this relationship is moderated by their financial flexibility. Using statutory data from 2001 to 2016 from the National Association of Insurance Commissioners database on U.S. property and casualty insurers and a simultaneous equations model, we examine how financial flexibility moderates the effect of reinsurance—a risk management tool commonly used by insurance firms—on debt capacity. We find that the relationship between reinsurance usage and debt capacity is positive for financially inflexible insurers, but negative for their financially flexible counterparts, thereby suggesting that the effects of reinsurance are actually dependent upon the financial flexibility of insurers. Several robustness checks are conducted and our main results remain qualitatively unchanged.

Psychiatrists Advocate for Expanded State Telehealth Laws

Psychiatrists Advocate for Expanded State Telehealth Laws

투명성과 보험모집수수료 공개 제도- 개정 보험업감독규정(2020.1.15. 개정)의 검토를 중심으로

보험상품의 판매는 다른 상품 대비 모집종사자의 권유에 의하여 판매되는 경우가 많으나 수수료 체계와 지급방식은 모집종사자의 판매 인센티브에 강력한 영향을 미치게 된다. 따라서 실제적인 판매과정에서 모집종사자들과 계약자들간의 이해상충 소지가 큰데도, 한국의 법제는 소비자가 적정하게 판단하기 위한 관련 정보를 충분히 제공하기 위한 역할을 다하였는지 의문이 제기되어 왔다. 그런데 최근 개정된 보험업감독규정은 모집수수료 관련 법제를 주로 개선하였다. 개정 규정은 모집조직에게 주어지는 수수료등의 범주를 획정하고, 분할지급방식을 도입 · 유도하기 위한 장치를 도입하고, 일정한 보장성보험에 관한 사업비 공시기준을 강화하는 등 법제를 개선하였다. 이를 통하여 개정 규정은 소비자의 알 권리를 제고하고 모집종사자에 의한 불완전판매 소지를 줄이는 것을 목적으로 하고 있다. 그러나 개정 규정에 의하더라도 모집수수료는 여전히 ‘간접’공개될 따름이며 분할지급의 선택권 제공은 제한적이며 승환관련 공시의무는 여전히 미흡하다는 한계가 있다. 그러나 수수료를 소비자가 아닌 보험회사가 지급하는 상황에서 모집종사자가 수취하는 수수료의 내역과 지급시기를 소비자에게 적정하게 공개하지 않는다면 이해상충 해소가 어렵다. 따라서 수수료를 보다 직접적으로 공개하고 점진적으로 수수료 분급을 유도하는 비교적 과감한 정책을 검토할 필요가 있으며, 아울러 불완전판매의 한축으로 지적되는 승환의 경우 승환에 해당하는 대체 보험계약 권유시 모집 수수료에 관한 직접 공개를 의무화하는 등 관련 공시의무를 확대할 필요가 있다.

Contraceptive Mandate, ACA Final Rules, And COVID-19.

The Supreme Court upheld broad exemptions to the Affordable Care Act contraceptive mandate; new ACA rules were finalized.

Outcome of Icelandic patients undergoing cytoreductive surgery and hyperthermic intraperitoneal chemotherapy (CRS-HIPEC) abroad

Peritoneal carcinomatosis is a known complication of colorectal cancer and has long been considered very difficult to manage. The survival has been reported to be under two years after systemic chemotherapy with or without palliative surgery. The most recent method of treatment is compiled of cytoreductive surgery and hyperthermic intraperitoneal chemotherapy (CRS-HIPEC) and has been suggested to significantly increase survival. The aim of this study was to research the cases of Icelandic patients undergoing this treatment overseas and the impact it has had on their disease. A retrospective study of all Icelandic patients who have undergone CRS-HIPEC treatment abroad 2008-2017. Information was retrieved from medical records and from registry of the Icelandic Health Insurance committee of medical treatments abroad. A total of 11 patients have undergone CRS-HIPEC treatment after having received their initial treatment in Landspitali University Hospital. All of the surgeries were performed in the United States by the same surgeon in the years 2008-2017. The group consists of 10 women and 1 man with a mean age of 53 years. The cause of peritoneal carcinomatosis was appendiceal cancer for 7 patients (67%) and colon cancer for 3 patients (27%). One patient had a primary malignancy of the peritoneum, mesothelioma. Three patients suffered complications within 30 days of surgery, 2 had infection and 1 had an anastomotic leak. Another patient had a late complication of bowel stenosis and later a fistula. Five patients have completed their five year observation period post surgery without diagnosis of recurrence and mean follow-up time was 44 months. Out of 11 patients, 10 are still alive. Five have been diagnosed with recurrence of disease. Icelandic patients who have undergone CRS-HIPEC treatment have in most cases done well and survival is comparable to other studies. Half of the survivors did not have recurrence of disease within 5 years of surgery. Prognosis has improved since the introduction of this treatment and every reason to keep sending selected Icelandic patients abroad to receive it.

APA Calls for Opioid Settlements to Fund Workforce Training, Treatment

Back to table of contents Previous article Next article ProfessionalFull AccessAPA Calls for Opioid Settlements to Fund Workforce Training, TreatmentMark MoranMark MoranSearch for more papers by this authorPublished Online:24 Jun 2020https://doi.org/10.1176/appi.pn.2020.7a30AbstractA 29-page white paper describes existing evidence-based practices that can be expanded to improve treatment of pain and addiction and emphasizes the need for more rigorous enforcement of parity laws.Some funds from the class action suits filed against opioid manufacturers should be used to expand the number of health professionals who are trained to treat patients with substance use disorders (SUDs), disseminate evidence-based treatments, and enforce parity laws, according to APA and six other mental health and addiction specialty groups.APA and its partners made their request in a letter to the attorneys representing the classes of patients represented in lawsuits filed against pharmaceutical companies for the manufacture and promotion of opioids that resulted in widespread addiction and overdose. The letter was also copied to Judge Dan Aaron Polster of the Northern District of Ohio, who is presiding over the class action suits.The letter was accompanied by a 29-page white paper outlining the scope of the opioid epidemic and an analysis of what is necessary to meet the demand for treatment.“While opioid addiction is complex, it is treatable and preventable,” APA CEO and Medical Director Saul Levin, M.D., M.P.A., and leaders of the other groups wrote, “but not with current limitations on the workforce trained in the treatment of substance use disorders, limited access to quality care, and discriminatory insurance coverage for mental health and substance use disorders. Should there be a settlement of the legal cases, we respectfully request that funds be used to expand the workforce qualified to prevent and treat substance use and mental health disorders; disseminate trainings and education regarding evidence-based treatments to increase adoption of clinical best practices; and enforce mental health and addiction parity and consumer protection statutes in states.”Also signing the letter were Kevin A. Sevarino, M.D., Ph.D., president of the American Academy of Addiction Psychiatry; Gabrielle A. Carlson, M.D., president of the American Academy of Child and Adolescent Psychiatry; Martha J. Wunsch, M.D., president of the American College of Academic Addiction Medicine; Paul Earley, M.D., president of the American Society of Addiction Medicine; Paula J. Lum, M.D., M.P.H., president of the Association for Multidisciplinary Education and Research in Substance Use and Addiction; and Kathleen T. Brady, M.D., Ph.D., president of the International Society of Addiction Medicine.In addition to boosting the workforce and disseminating best practices, the 29-page white paper emphasized the need for more rigorous enforcement of parity laws. “State insurance commissions and attorneys general have significant workloads of which parity and consumer health fraud are but a small part. These agencies need additional resources to aggressively and proactively ensure compliance with existing federal and state laws in order to guarantee that discrimination against those with mental health and SUDs and misrepresentations about insurance coverage do not preclude access to evidence-based care.”The paper concluded: “There is no silver bullet that will cure those with addiction and co-occurring mental illness or that will cure or prevent another crisis. However, the funding generated from this litigation could be used to make substantial progress toward controlling the OUD epidemic and ensuring that it or similar substance use consequences do not recur in the future. … What the litigants can do immediately is use some of the funds that will come out of this litigation to ensure that there is an adequately trained health care professional workforce to continue the research into prevention and treatment of addiction, to treat patients using clinical best practices, and to guarantee that persons with addiction and/or mental illness have access to nondiscriminatory health insurance to afford their treatment.” ■A copy of “Addressing Access to Care in the Opioid Epidemic and Preventing a Future Recurrence” may be obtained by contacting Ashley Witmer at [email protected]. ISSUES NewArchived

AN EMPIRICAL INVESTIGATION INTO THE RELATIONSHIP BETWEEN PREMIUMS AND CLAIMS PAID IN THE NIGERIAN INSURANCE INDUSTRY: A 2000-2017 ANALYSIS

This study is an investigation into the relationship between premiums received and claims paid in the Nigerian insurance industry over the period 2000-2017. Data on gross premiums received and gross claims paid over the period were gotten from the Central Bank of Nigeria (CBN) statistical bulletin, National Insurance Commission (NAICOM) and the Nigerian Insurers Association (NIA) annual reports. Stationarity test carried out on the data reveal that data is stationary at the 1%, 5% and 10% levels of significance. The cointegration test reveals that no cointegration exists among the variables which imply that there is no long run equilibrium relationship between the variables. Using the ordinary least squares regression, the calculated probability value of 0.167 is higher than the 0.05 significant value, hence we accept the null hypothesis that there is no significant relationship between claims paid and premiums received in the Nigerian insurance industry. The coefficient of determination (R2) of 0.91157 indicates that gross premiums contribute 91.2 percent to variations in gross claims while the remaining 8.6 percent is owing to factors outside the regression model. We therefore conclude that claims paid by insurers is not a function of premiums received and recommend that insurers should endeavour to settle claims promptly and equitably to increase client satisfaction.

The role of distribution channels in market discipline for the life insurance industry

This paper investigates the role of distribution channels in market discipline for the life insurance industry as marketing intermediaries help transmit information between insurers and consumers. Based on life insurance data in Taiwan during 2004–2013, the paper analyses the relationship between insurance demand and insurers’ enterprise risk considering the effect of the distribution channel. The empirical results suggest that the distribution channel is an influential factor in insurance demand. The results also show that insurance demand and choice of distribution channel in Taiwan are responsive to insurers’ enterprise risk. These findings suggest that insurance commissioners should consider the role of marketing intermediaries when market discipline is adopted as an approach for surveillance of the insurance market.

Impact of Audit Quality on the Implementation of Corporate Governance in the Insurance Companies Listed in Amman Stock Exchange

The study aimed to identify the concepts and principles underpinning the corporate governance, and get to know the level of commitment of the Jordanian insurance companies' implementation of the instructions of corporate governance issued by the insurance commission, and determining the effect of audit quality on the level of implementation of the instructions of corporate governance. The study was conducted on a sample consists of 15 Jordanian Insurance Companies listed in the Amman Stock Exchange, during the period from 2011 to 2014. Audit quality was measured by the size of the audit office, audit fees, and auditor retention, relying on the instructions of corporate governance for insurance companies. The researcher designed a questionnaire containing five sections Associated with each of the board of directors, executive management, and the audit committee, risk management, and internal control system, and internal audit, the questionnaire was distributed to insurance company's staff who occupy different managerial positions. To achieve the objectives of the study the researcher used a number of statistical methods that fit the nature of the variables of the study, such as (Simple linear Regression model) and (Multiple Regression model) to test the hypotheses of the study.
 
 The study results showed that the Jordanian insurance companies show an acceptable commitment of the corporate governance instructions implementation; also, it showed that there is an impact of audit quality on the implementation of these instructions. Based on these results, the study provides a set of recommendations including Identify regulators responsible for following up the actual implementation of instructions of corporate governance in insurance companies, and reformulation of these instructions in a way to ensure the protection of the rights of stakeholders, and to clarify the functions and responsibilities of the Audit Committee. In addition, to focusing on the role of the external auditor, and working on increasing external auditor communication with the Audit Committee and Internal Auditors.

Insurance Sector Development and Foreign Direct Investment in Nigeria

Aims: The study examined the impact of insurance sector development on foreign direct investment in Nigeria.
 Study Design: The ex-post facto research design was employed to observe the study components in retrospect. Secondary data spanning 1996 to 2017 was sourced and collated from the World Development Indicators, Central Bank of Nigeria statistical bulletin and National Insurance Commission annual balance sheets.
 Place and Duration of Study: Department of Banking and Finance, Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria. The study was carried out between November 2019 to January 2020.
 Methodology: The ex-post facto research design was employed to observe the study components in retrospect. Secondary data spanning 1996 to 2017 was sourced and collated from the World Development Indicators, Central Bank of Nigeria statistical bulletin and National Insurance Commission annual balance sheets. The time series data was estimated using the least square technique.
 Results: The results indicates that; the total asset size of the insurance sector exerts a negative and statistically insignificant impact on foreign direct investment inflow to Nigeria, total insurance business investment exerts a positive and statistically insignificant impact on foreign direct investment inflow to Nigeria and finally, total insurance premium exerts a negative and statistically significant impact on foreign direct investment inflow to Nigeria.
 Conclusion: The study concludes that insurance sector development does not attract foreign investment inflow to Nigeria. The study recommends that the insurance sector should be revamped in order to absorb risk and uncertainty and be a vehicle for risk transfer and minimization. A policy of restructuring would help instil public confidence, boost insurance policy sales, increase insurance premium and invariably increase the availability of investible funds to boost economic activity. The study suggests that these would help attract foreign direct investment to meet domestic funding needs of Nigeria.

From the Desk of the Chairman - Banking and Insurance Committee

From the Desk of the Chairman - Banking and Insurance Committee

The New EU Rules on Insurance Customer/Policyholder Protection Viewed against the NAIC Model Acts

Abstract Effective October 1, 2018, the Member States of the European Union had to bring into force the laws, regulations and administrative provisions necessary to comply with Directive (EU) 2016/97 of the European Parliament and of the Council of January 20, 2016 on insurance distribution (IDD). The IDD arose out of a desire to give insurance customers equal protection regardless of the type of distributor from which they obtained insurance. Essentially, the IDD seeks to level the playing field of protections for insurance customers by simplifying, consolidating, and expanding customer protections when needed. The IDD has the stated goal of focusing on “the area of the disclosure of information” to customers. The directive is intentionally broad and applies “to persons whose activity consists of providing insurance or reinsurance distribution services to third parties.” Although it is much too early to predict the course of the IDD within the European Union, a comparison can be drawn with the Model Acts promulgated by the National Association of Insurance Commissioners (NAIC) in the United States to glean an inkling as to where the IDD might be headed. Parts of the Model Acts have been in place for a number of years and, while the legal regimes they cover are modestly different, there are nonetheless broad lessons that can be drawn in the comparison of the two. Whether the path of the IDD follows the arc of the Model Acts, or not, will perhaps be attributed to three instrumental aspects: 1. The IDD is unquestionably focused on customer protection. The NAIC is more nearly concerned with uniformity. It may be that the IDD’s focus will contribute to better traction among the EU Member States then Model Acts have experienced in the United States. 2. Unlike the IDD, the NAIC Model Acts are not comprehensive with respect to customer protection. 3. The NAIC Model Acts have seen inconsistent adoption by the states, a factor that has contributed to a lack of uniformity and constancy across any number of insurance products. While the IDD should not suffer from spotty adoption, the relative flexibility of the EU Member States in adopting more stringent rules may lead to a lack of uniformity and consistency similar to that of the Model Acts. Thus, the IDD may very well face the same headwinds faced by the Model Acts in the United States. Accurate predictions are always elusive when dealing with the implementation of regulation and legislation. Accordingly, we will watch with curiosity whether the IDD, which takes a much more global approach in customer protection, will see more success.

Groundbreaking Court Ruling Against Insurer Offers Hope in 2020

Groundbreaking Court Ruling Against Insurer Offers Hope in 2020