The Market Conduct Analysis Framework
October 2012, CIPR Newsletter
The Market Conduct Annual Statement Comes of Age
January 2012, CIPR Newsletter
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Market Analysis Manager
Assistant Director, Market Regulation
Last Updated 9/20/17
Issue: Market regulation is constantly evolving to respond to changes in the insurance marketplace and technology. One of the more recent innovations is the development of the Market Conduct Annual Statement (MCAS). The MCAS provides regulators with a uniform system of collecting market-related information to help states monitor the market conduct of companies. Currently, the MCAS is used to collect claims and underwriting data on the Private Passenger Auto, Homeowners, Life, Annuity and Long-Term Care lines of business (LOBs). This allows regulators to identify concerns regarding claims and underwriting.
Background: The MCAS collection system project began in 2002 with the goal of collecting uniform market conduct related data. MCAS ratios were developed to provide more meaningful comparisons between companies than the raw data allowed. To prevent different data definitions from one state to the next, participating states agreed upon and published a set of common definitions organized by line of business. The definitions were broad enough to allow the flexibility necessary in the early years of the MCAS.
In 2008, the NAIC unveiled its long-range plans for the centralization of MCAS data which included the participation of all states and the District of Columbia. In 2009, the NAIC Executive Committee approved the creation of the new MCAS collection tool to aid insurance companies in reporting their data and sending it to the NAIC for centralized storage and analysis. The MCAS is a collaboration among regulators, the industry and consumers who recognize the benefits of monitoring, benchmarking, analyzing and regulating the market conduct of insurance companies. Through this teamwork, the MCAS has grown from eight states collecting only life and annuity information to nearly all states collecting homeowners, private passenger auto and long-term care data, as well as life and annuity information.
On April 15, 2011, the NAIC launched a newly redesigned collection system to simplify the MCAS process. The new automated tool was designed to help improve state regulation by allowing all participating states to analyze the industry on a national and state level. This is a significant step; as such centralized data allows more types of analysis to be performed by NAIC support staff and regulators. The MCAS and the centralization of MCAS data have given insurance regulators another tool to protect insurance policyholders and claimants. Through the cooperation of insurance regulators and the insurance industry, the MCAS will continue to grow and promises to be the primary source of market conduct data for use in effective market analysis. The NAIC Market Analysis Procedures (D) Working Group is responsible for selecting new MCAS lines of business, and promoting uniform analysis by applying consistent measurements and comparisons of MCAS data provided by companies. The data elements and data definitions for the MCAS are overseen by the Market Conduct Annual Statement Blanks (D) Working Group.
Status: The MCAS continues to grow in the number of states collecting MCAS as well as in the number of lines of business reported through MCAS. Forty-nine jurisdictions are participating in MCAS as of the 2016 data year. Below is a company and filing count by LOB for the 2016 data year:
|Line of Business(LOB)||2016 Individual State Filing Count||2016 Company Count|
|Private Passenger Auto||5685||745|
Based on 2016 Filing data as of September.
The Health MCAS was adopted at the NAIC Executive/Plenary session during the 2016 NAIC Summer National Meeting. Health MCAS data will be collected for the first time beginning with the 2017 data year and will be due September 30, 2018.
The Lender-Placed Home and Lender-Placed Auto MCAS were adopted at the NAIC Executive/Plenary session during the 2017 NAIC Summer National Meeting. Lender-Placed Home and Auto data will be collected for the first time beginning with the 2018 data year and will be due June 30, 2019.