The NAIC uses market conduct annual statement (MCAS) data to better analyze the state of play. The new “Other Health” blank will be critical for business.
What Is the NAIC’s New ‘Other Health’ Blank?
MCAS stands for
market conduct annual statement. It was created in 2002, evolving in response to state insurance regulators’ need for more data and a better way to collect and analyze market conduct information. We had a chance to sit down with Randy Helder, assistant director of market regulation at the National Association of Insurance Commissioners (known as NAIC), to better understand the initiative.
MCAS began with eight states operating independently, collecting market conduct information from companies. Ohio took the lead in helping companies with their technical needs, setting up all the hardware and software to
empower data collection. Then, the NAIC began centralizing MCAS so that companies could report their MCAS on one tool to one location for all the individual states to view.
NAIC first collected the MCAS information at an NAIC conference in 2010. Originally, MCAS began with four lines of business: annuity, life, auto, and homeowner. Since 2010, NAIC has added long-term care, health, lender-placed insurance, disability, STLD, and flood insurance. Currently, the organization is adding an “Other Health” option.
How Do MCAS Blanks Work?
MCAS originated when market analysts in the department of insurance received many complaints and realized they needed more data from the industry to better analyze the state of play.
This is when nine states in the Midwest created questions to try to get better data. The questions included: “How quickly did you cancel X?” and “How did you market Y?” These questions helped their analyses become more specific.
The questions were placed on a blank and sent to companies to fill in. A blank is a type of filing in which data is collected from a company and broken down by different types of insurance. Companies are required to fill out a blank if they write more than $50,000 of business within a particular state. All MCAS blanks are filed per state. So, for example, if you write property for people living in Illinois, you’ll report your data to Illinois.
Over time, there have been revisions and additions to the original MCAS blanks. Data has been added in regard to free looks, closed claims, claims closed without payment, and lawsuit information. NAIC recently started adding digital claims handling information and accelerated underwriting information to respond to the way the industry is transforming digitally.
What About the ‘Other Health’ Blank?
The “
Other Health” blank is a new form of blank that covers lines of insurance not included in the main “Health” blank, such as accident, accidental death and dismemberment, and hospital and surgical medical expenses.
It’s a descendant of the original “Health MCAS” blank, which covers everything a business needs to comply with the Affordable Care Act. Because some product lines are not subject to the ACA or have additional interests, this extra blank covers those other health products.
The first “Other Health” data collection year will be 2024. As PIMA shared in the March 2022
webinar with the NAIC, the NAIC’s Market Relation and Consumer Affairs (D) Committee had to adopt the “Other Health” blank by August 1, 2022, to start collecting data in 2023. Because adequate preparation time is vital, missing that August deadline would have meant delaying a year. The Market Regulation and Consumer Affairs (D) Committee adopted the “Other Health” blank on July 15, 2022.
How Do You Find the ‘Other Health’ Blank?
To find the “Other Health” blank, visit the
NAIC homepage. Here, you’ll see areas for regulators, industries, consumers, and committees. Go to the “industry” page. Under the “market conduct” tab, you’ll see the
market conduct annual statement. This is the page where you would submit your data for the “Other Health” blank once it’s officially implemented.
However, until the “Other Health” blank is adopted, it resides on a different page in draft form. To reach it, return to the homepage and visit “committees” instead. Here, you’ll find a menu of options, including the “Market Conduct Annual Statement Blanks
Working Group.” Click on the tab titled “exposure drafts” on the right-hand side, and you’ll see the draft entitled “MCAS Other Health Data Call and Definitions.”
How Do You Fill in an MCAS ‘Other Health’ Blank?
For any MCAS blank, insurance professionals need to provide information about policies, administration, claims, complaints, and lawsuits. The “Other Health” blank is no different. The form will ask questions about:
- The number of applications received and whether they were issued or denied
- The number of terminations and the reasons for those terminations
- How quickly claims are being handled and resolved
- The aggregate dollar amount of paid claims during the year and the loss ratio
Finally, the blank will require marketing and sales information, including whether applications were approved, by what means they were received, and how much commission was paid and returned to the company on policies that were subsequently canceled.
You can see that the content of this document is largely the same as the various MCAS blanks; it just refers to other health scenarios.
Another important feature of the “Other Health” blank is the “additional comments” section. No company is the same, and there’s always a story behind the quantities and figures reported that might need explanation. So, the NAIC always gives organizations an opportunity to provide longer-form comments.
How Can Industry Professionals Use MCAS?
The information MCAS blanks provide allows NAIC to form standard ratios. For instance, the organization gets a more accurate idea of the average time it takes to settle a claim. When a company files its blank with MCAS, it receives a report on how its ratios compare to state aggregate ratios.
Another way these ratios might prove helpful is when the state looks at a company’s rates compared to its state aggregate. Knowing the average rates will give the company an advanced idea of the kinds of questions it’s likely to be asked by state insurance regulators.
For example, if you can see from your MCAS score report card that your claims denial rate is 40%, while the state average is 25%, you can anticipate drawing some attention from analysts. As a result, you’ll have a chance to review this data again.
In addition, businesses don’t have to worry about confidentiality. The concern of confidentiality follows companies around, and many are worried the information they file to MCAS will be automatically visible to other companies. Companies’ MCAS data is treated confidentially, however, with the scorecards being generated in the aggregate per state with no ability to identify specific company data.
Another reservation some companies have is the belief that filing a blank will unnecessarily alert regulators to inconsistencies. This is less of a problem than one might think because regulators are expecting to see hiccups in the first rounds of reporting. Moreover, NAIC has a good idea of what other blanks companies should be filing. Furthermore, because so many companies are filing now, the absence of a particular blank will alert regulators.
If you’d like to stay in the know about other NAIC updates and industry news,
PIMA is here to help.
Contact us today to learn more about the benefits of a PIMA membership, including networking, peer-to-peer learning, and education opportunities.
Published on October, 3 2022.PIMA® (Professional Insurance Marketing Association®) is a member-driven trade association focused exclusively on the group-sponsored benefits market.
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