Best Practices Archives

Technology Tools to Optimize Your State Filings Process

By Patrick Light and Khushboo Jashnani

Though submitting and tracking state filings has improved dramatically over the last decade, many insurance companies are not yet taking full advantage of state filings software and technology that could further improve efficiency and visibility.

Many processes are still locked in emails and Excel spreadsheets on individual computers, decreasing visibility for business partners and other stakeholders. In addition, the lack of a standardized, centralized, and easily accessible repository for state filings increases the workload on insurance companies’ state filing teams.

As consulting and state filing support leaders for some of the nation’s top insurance companies, we have developed innovative state filings software to help our teams increase visibility and control. This industry-leading software, StateFilings.com, is available for our clients to license.

A Streamlined Workflow

StateFilings.com was designed by the state filing experts at Perr&Knight. This advanced, intuitive software streamlines the state filing workflow, enabling greater transparency, accessibility, and efficiency.

Here’s a process demonstrating how this tech-enabled workflow helps state filings departments:

Business Partner Creates a Project

Business partners have a designated role with specific permissions in StateFilings.com. Business partners are generally “read-only.” However, they can enter a new project and hand it off to the state filings unit. Business Partners cannot submit filings or add or edit any other data in the system. A business partner-specific view streamlines their ability to monitor multiple project statuses simultaneously.

Adding and Sharing Documents

Next, the business partner can add documents they want to hand off to the state filings unit. Using the project attachments feature enables the uploading of Word and Excel documents, which can be shared and edited by multiple users simultaneously. Business partners can also create a form template in the exact format that a filer would file it.

Sharing a template with business partners eliminates a manual handoff — the state filings unit can apply the template to a filing instead of re-typing the information into the system.

A Smooth, Instant Handoff

After creating the filing template and attaching relevant documents, the business partner changes the project’s status to “Submitted to Filings Unit.” From this point forward, the business partner can no longer edit the project — they are read-only. The system then automatically fires an email to the state filing unit. A state filing analyst can then accept the project and change its status to “Assigned” to begin their review.

Tracking Work in Progress

Once documentation is finalized, the state filing analyst can create filing drafts and change the project status to “Work in Progress,” indicating the filings have started. The analyst can apply templates to multiple filings simultaneously, saving time by eliminating the need to enter form data manually. The state filings software further streamlines the process by enabling analysts to submit numerous filings to SERFF at once.

Authors can include important information and track the status of each filing in real time. Each submission contains inputs for the following:

Filing requirements
Project expectations (TOI, form/rate/rule, etc.)
Peer review tracking and feedback notes
Filing submission dates
Objection tracking and corresponding follow-up and due dates
Approval communications and dates
And more

Automated Objection Handling

When an objection is received, built-in email functionality proactively fires an email to all authors, eliminating the need to proactively monitor SERFF. StateFilings.com stores all past objections, enabling data mining and specific information searches. Two-way integration with SERFF allows authors to issue a response directly from StateFilings.com. Consolidation of all filing-related communications saves time by eliminating the need to track down disparate emails.

Automated Approval Notifications

StateFilings.com automatically notifies authors when SERFF issues an approval. API integration enables companies to update external systems upon SERFF approval, further streamlining the workflow and supporting stakeholder visibility.

Advanced State Filings Software Improves Efficiency

Homegrown systems like Excel, email, and hard drive storage may have been cutting-edge technology in the past but are now outdated. Companies still using these non-centralized technologies compromise efficiency and increase the risk of crucial information falling through the cracks.

StateFilings.com consolidates all data to eliminate manual handoffs and improve tracking visibility. Collaboration in a shared platform enables business partners, analysts, and other stakeholders to keep current on all filings while working together toward a common goal.

See how StateFilings.com can improve your filing process. Contact the experts at Perr&Knight to schedule a state filings software demo.

Five Benefits of an Expert Review of Your Rate/Form Filings

by Brett Horoff

Have you had a filing disapproved in Florida or New York?

Are you receiving multiple objection letters on your California filing identifying items that do not comply with state requirements?

Do you struggle with providing the required actuarial support in Washington?

You are not alone.

It is incredibly difficult for companies to keep up with each state’s requirements. Most companies do not submit enough filings or have the consistent communication with the Departments of Insurance (“DOI”s) to gain the expertise needed to handle certain states without consulting an expert.

If you work for a large insurance company, you may have a pre-filing meeting with the DOI to discuss your filing. This allows you to obtain some feedback on potential concerns that the DOI may have on the proposed rates and forms, but this is not a comprehensive review, and you may often run into DOI objections during the filing review process that could have been avoided with additional insight on the state’s requirements. Adding an expert review of filings prepared by your company is a “must have” to achieve timely approvals in key states.

Below we provide greater details on the benefits achieved through an expert review of your filings by an actuarial and insurance consulting firm with extensive state filings experience.

Benefit #1: Increase the likelihood of proposed rates and forms being approved

It is not unusual for companies to receive filing objections from state DOIs that request changes to the company’s proposed rates and forms. If a company does not have a full understanding of the options that will satisfy the DOI’s concerns, it may make undesired revisions to the product in response to an objection.

Our actuarial consultants worked recently on a management liability filing in California that used range for rates and rating factor. The DOI had concerns about the subjectivity of the ranges, which may lead a company to eliminate the ranges and use specific rates/factors. Our actuarial consultants were able to assist the company in providing a solution that kept the ranges and was acceptable to the California DOI.

Whether it is to ensure a company obtains its proposed rate change or to recommend changes to the company’s rating plan to achieve the company’s goals, a review by an actuarial consultant and an insurance product development expert can have a positive impact on a company’s bottom line.

Benefit #2: Ensure filing complies with DOI requirements

While each state has laws, often there are DOI positions and interpretations, which are not published, and companies learn about them after the filing and during the DOI’s review. Not knowing this type of information could negatively impact a company’s filing. For example, New York disapproves filings without the opportunity for the company to respond when filings are substantially out of compliance with state requirements. During 2021, the New York Department of Financial Services disapproved 19% of submitted filings and another 8% of filings were withdrawn. New York is not the only state that takes this approach.

The Florida Office of Insurance Regulation is often known for disapproving commercial lines form filings that are not compliant with the state requirements. For auto policies (both personal and commercial), New York has unique coverage requirements that must be reflected on the declarations page. Even if a company uses a bureau template, a state-specific version is generally needed to avoid a series of objections pertaining to the format and contents of the declarations page.

Having an expert review from an actuarial and insurance consulting firm with regulatory compliance services can help companies avoid the dreaded disapproval letter.

Benefit #3: Identify potential DOI objections

While obtaining filing approvals without any DOI objections is unlikely in some states, the ability to identify potential objections will allow companies to address concerns prior to submitting the filing. Not only does this reduce the number of objections received during the state filing review process, but it also provides companies the opportunity to address items that may lack the appropriate support or may raise additional questions from the DOI.

By having an expert review, the company can identify potential objections and either address them upfront or be prepared for them. Many companies are surprised when they receive objections on California filings questioning items that were previously approved in a prior filing and are not being revised in the current filing. For rate and rule filings, the California DOI requires a complete manual with each filing and will review the entire manual – not just the proposed changes.

Benefit #4: Improve relationship with the DOIs

Although DOIs will review each filing independently, the DOIs will remember companies that consistently submit filings not in compliance or lack appropriate support. For frequent violators, the DOIs may outright disapprove the filing without sending an objection letter. The DOIs share information within its various operational areas as well as with other DOIs. This information can often lead to a market conduct inquiry, especially if the concern is related to noncompliance or may have an impact on the consumer. When a company submits a complete and compliant filing, the return on investment may lead to a quicker review by the DOI.

With many of the DOIs experiencing staffing shortages, any assistance companies provide to reduce the time that the DOIs spend on reviewing filings will be appreciated by the state.

Benefit #5: Reduce the time to approval

When companies are submitting rate filings, the premium impact of the changes could be in the millions, so reducing the time to approval could have a significant impact on the company’s bottom line. In 2022, the average time to approval for California on a rate filing is 337 days (median: 264 days) and a new program filing is 207 days (median: 209 days).

When companies have their filings reviewed by actuarial consultants and state filings experts, it allows submission of a more compliant filing with the proper supporting information and may result in the filing being approved quicker. Another benefit of engaging these experts is that they could help companies navigate filings through the DOI in the most efficient manner possible.

Need an expert review of your filings?

Perr&Knight is a leading provider of actuarial, product design and state filing services to insurers. Our actuarial consultants, product design consultants and state filings experts are very familiar with all the filing requirements in each state – especially the states where insurers struggle the most.

Please contact us if you need an expert filing review.

Managing State Filings Just Got Easier

by Patrick Light

Updating and tracking filings in the System for Electronic Rates & Forms Filing (SERFF) has always been a tedious, time-consuming process for state filings departments at insurance companies. Manual data entry runs the risk of human error and creates the potential for information loss. Both of which can slow the filing pace or set the whole process back to zero with a disapproval.

When Perr&Knight introduced our proprietary StateFilings.com software in 2015, we knew the ability to submit and track filing information from a single, real-time cloud-based platform would save state filings teams a significant amount of time and guard against the minor errors that can negatively impact approvals. For years, companies were manually downloading filing documents from SERFF, entering the filing details into their state filing management system, and sending out filing status reports to interested parties. Those days are over. All of this has been automated through StateFilings.com. Filings departments have been freed to dedicate more time to addressing DOI requests and objections, which helps speed up the time to approval for filings and has a direct impact on a company’s bottom line.

Two-way communication with SERFF is here

Though the initial version and subsequent updates of StateFilings.com was a massive time-saver and a huge help for state filings departments, there was just one piece missing: the system only worked in one direction. Filings departments could use StateFilings.com to monitor information coming from state Departments of Insurance (DOIs) but initiating new filings and uploading information to SERFF still required lengthy manual processes on SERFF’s cumbersome website. Now, we are excited to say that the 4.0.0 release of StateFilings.com has solved the communication challenge by enabling two-way exchange functionality with SERFF. This update streamlines the filing process for insurance companies even further.

StateFilings.com’s recently launched system upgrade uses a two-way API to push data into SERFF, so users are no longer required to access the SERFF website directly. Instead, the entire scope of state filings management can be handled on a single platform via a streamlined, intuitive interface.

A recap of StateFilings.com’s capabilities

As mentioned above, we developed the StateFilings.com software to accelerate the filing process by streamlining workflows for insurance company state filing departments. Because we used this software internally for many years before licensing it to our clients, we knew the platform provided measurable value.

In place of the time-consuming manual processes most state filing departments relied on, our software harnesses the power of technology to manage and automate many mundane (but crucial) state filings tasks. Here are some of the system’s key features and benefits:

A cloud-based system enables 24/7 access
User-level security and role-based permissions protect sensitive data
Filing management (including status)
Objection and response library
Forms libraries for document management
Real-time information updates

More useful features

This year’s upgrades to StateFilings.com build on all the features and functionality above, further streamlining the filing process. Here’s how:

Work while SERFF is down

Users can continue to access and review filings, even if SERFF experiences problems.

‘Note to Reviewer’ improvements

Users are now able to submit notes to DOI reviewers en masse across multiple filings and projects. Editable temple language ensures consistency and cuts down on time spent drafting emails.

Filing cloning ability

Users can create a single countrywide draft and with one “save-as” clone for all 50 states, instead of one by one. When submitting to more than one state, generating multiple clones of one filing with a single click eliminates the repetitive process of filing initiation.

Scheduled item template enhancements

Create and update your scheduled item templates for each project and then save time by applying a template to multiple filings at once instead of having to import the template into each individual filing.

Developed specifically for insurance companies

The SERFF system was a major industry breakthrough for insurance companies who were accustomed to filing paperwork via mail or fax. However, as times have changed, state filings departments have increased the demand for a streamlined, user-friendly experience that mimics many of the other digital tools in the modern office suite.

We applied our decades of experience providing insurance support services for products in every line of business to develop a straightforward but powerful tool based on the realities of companies’ state filing department workflows.

The updated StateFilings.com is the latest advancement to accelerate the filing process, enabling insurance companies to be more efficient with their time and more cost-effective overall.

Interested in learning more about what StateFilings.com can do for your business? Schedule a demo today.

Top 5 Reasons State Filings Are Rejected or Disapproved

by Ashley Allen

Staying on top of state filings can be tricky. Demanding regulators, detailed filing requirements that vary by state and mountains of required supporting documentation can quickly become overwhelming, even for insurance companies with robust in-house filing departments.

Objections or disapprovals from Departments of Insurance (DOIs) can and do happen, but there are some things you can do to mitigate that risk. Though it is impossible to know exactly what a regulator may take issue with, our experience providing state filings support for insurance companies has revealed certain things are likely to cause your state filing to get kicked back to you.

Here are the top five reasons regulators reject state filings.

1. Unclear understanding of each state’s filing requirements and expectations

Unfortunately for insurance companies, every DOI has unique requirements for submitting filings, amending filings, and addressing objections. Failure to comply with each DOI’s requirements can turn a simple objection into outright disapproval.

Incorrect formatting or failure to submit the correct information in the right spot can lead to a rejection. For example, certain states require insurers to submit redlines (marked-up versions) in the same area as final new forms in SERFF. In other states, this documentation is simply considered supporting documentation.

Obtaining clarification is not always easy. Regulators in Maryland, Alaska and Pennsylvania are known for being accessible to answer questions before and during the filing. Some states are less likely to respond to inquiries, leaving you on your own to figure things out.

Unless you are keeping close track of what each state requires for new filings, amendments, objections and overall processes, you risk committing an error that can send your filing back to square one.

2. Failure to comply with state regulations

Your company’s regulatory compliance department should know what is and isn’t permitted within your jurisdictions and lines of business. Submitting forms or rates that aren’t permitted by a specific DOI is a surefire way to receive an objection or flat-out disapproval.

States are particular about what they will allow. Some states won’t permit ranges of rates. Some won’t allow certain types of forms or Defense within Limits, which is commonly used for professional liability products.

You can often find this information on the state’s DOI website, but it may not always be available.

Incorporating regulators’ expectations into your product design process can facilitate a more timely approval. Your state filings teams may need to work closely with your product development team to make sure your company’s insurance products are designed with compliance in mind from the start.

3. Lack of response to objections

Slow response to objections trips up many state filings departments. Unfortunately, timelines to address objections vary wildly. Some states can give a month or more to respond to an objection. Others may require an answer in two days. We’ve seen instances of regulators requesting corrections within hours.

If you are not able to respond to an objection by the due date and an extension is not granted, you may want to consider withdrawing the filing and resubmitting later, rather than risk running out of time. Not responding could trigger an automatic disproval—and may land you on the wrong side of regulators.

At Perr&Knight, we use a sophisticated software application, StateFilings.com, that we developed for internal use and then made available for license to our clients. StateFilings.com is a sophisticated tool in the management of state filings. It communicates directly with SERFF, pulling in objections and due dates to make managing workflows less risky.

4. Not reviewing/following the general instructions in SERFF

It may seem like a no-brainer, but it’s surprising how often this happens. Failure to follow directions outlined in SERFF can lead to rejection right off the bat.

While the filing wizard in SERFF led to a massive leap forward in efficiency, some parts of the interface can trip up your filing if you’re not careful. For example, Utah requires a specific certification statement for all filings. If you fail to include this statement with your filing, the Utah Insurance Department will issue an immediate rejection. But SERFF doesn’t have a specific spot for it. Therefore, knowing where to include this information is essential, even if there is no obvious designated area. Many states have unique questions or informational requirements such as this. If fields are blank, SERFF will not let you submit the filing. But knowing when to include specific information in certain fields, even if it’s not technically correct, will enable submission and may provide regulators with the information they require.

Until SERFF includes state-specific filing workflows that match what regulators are looking for, state filings departments will be forced to employ workarounds. Not completing the workarounds correctly—or worse, not knowing they are necessary—could lead to a swift rejection of your filing.

5. Missing or incomplete transmittals or checklists

If your filing is missing a transmittal or checklist, regulators may reject it without even an initial review.

Reasons for incomplete information vary: You may not realize a checklist or transmittal applies to your filing. Some checklists are complex and confusing. In some cases, you may be unsure how to answer a question on a checklist. Depending on the line of business, finding the appropriate checklists and transmittal requirements can be a challenge.

Though the oversight may not be intentional, DOIs don’t care. Missing or incomplete transmittals or checklists mean regulators do not have what they need to move forward, so they may issue a rejection and you’ll be forced to start over. Additionally, using the incorrect version of a transmittal or checklist can also result in an objection.

Ensuring your checklists and transmittals are complete, current, and correct is one of the most basic things you can do to guard against a state filings rejection. Working with partners like the state filings support team at Perr&Knight strengthens your position. Our experts know the requirements of every checklist and transmittal. We peer review your filings to make sure they are complete before submission.

State filings are never static

Our extensive experience providing filings support has shown us that the only constant is change. Insurance regulators have evolved, so certain shortcuts that worked years ago may no longer be enough. Some states permit longstanding workarounds, but others are becoming stricter about following the rules to a T. Regulations vary by state, which can cause hiccups when filing.

Partnering with state filings experts like the team at Perr&Knight can help protect you against avoidable mistakes that lead to rejections. Our state filings support teams dig into the minutiae, tracking nuances by state and line of business. Working with a team with decades of experience helps you avoid missteps from the get-go.

Beyond filing support, our actuarial consulting and product development teams can make sure the products you plan to offer are designed with compliance in mind. This type of up-front work can pay off huge when it’s time to file. A holistic understanding of the intersection between profitability, compliance, and regulatory approval helps you avoid costly mistakes that can slow your time to market.

Whether you handle state filings in-house or offload submissions to an experienced filings support team, keeping the above in mind will protect you against avoidable errors that put your approvals at risk.

Let our experts help you make state filings more manageable. Contact Perr&Knight today.

How Employees Drive Change at Perr&Knight

by Jason Hudson

We firmly believe our achievements as an insurance advisory and actuarial consulting firm rest squarely on the shoulders of our talented team members. For nearly 30 years, we have continued to seek out and develop innovative, experienced and engaged professionals to bring industry-leading support to our clients. Just as our talented team members add value and drive change at our clients’ businesses, they drive change in internal operations at Perr&Knight as well.

Measuring Employee Engagement

In 2015, the diverse group of team members on Perr&Knight’s Employee Development and Appreciation Committee recognized the importance of employee engagement and the need to measure it. They created a comprehensive 60-question survey to obtain honest employee ratings, feedback and insights across nine categories: communications, social connection, career/professional development, management training, company vision/services, work/life balance, fairness, performance & accountability/feedback, and compensation. The survey is comprised of positive statements about Perr&Knight to which the employee responds how they feel, i.e. Strongly Disagree, Disagree, Neutral, Agree or Strongly Agree.
Here is a sample of some of the positive statements contained on the survey:

Information and knowledge are shared openly within Perr&Knight.
I have been provided clear direction/feedback on how I can advance my career at Perr&Knight.
People of all cultures and backgrounds are respected and valued at Perr&Knight.
I have a clear understanding of how my department’s goals and objectives relate to corporate goals and objectives.

Each of the positive statement response options is assigned a rating from 1 (Strongly Disagree) to 5 (Strongly Agree). By assigning ratings to the responses, we’re able to aggregate results and score Perr&Knight in each of the nine categories. The survey is anonymous, but contains some demographic questions related to tenure, experience, working location and management level. So, in addition to calculating an overall score, we can calculate and compare scores by demographic group.

Making Informed Changes

Once the survey is completed, the aggregated scores by question, category and demographic group are shared with the principals of our firm. Because Perr&Knight has issued the survey every September since 2015, a history of the scores is shared as well.
Over the years, the survey results have been very informative – low-scoring categories have helped us realize where we need to focus more attention. For example, lower scores in the management training category resulted in the roll-out of online management training last year. Similarly, less than optimal scores for a question about senior leadership communication prompted the Employee Development and Appreciation Committee to host quarterly principal communications. One year, the scores by demographic revealed a potential engagement issue amongst our long-tenured staff, prompting one-on-one check-ins to seek more detailed information from that group.
The history of scores has also helped us see the impact of our initiatives. Since the beginning of the COVID-19 pandemic, most of our workforce has been working from home, which was a big change for our staff who primarily worked in our offices previously. Though we’re all physically dispersed, company management has made a concerted effort to help employees feel connected to one another through company-wide virtual activities like online games, virtual holiday parties and monthly birthday celebrations. The scores of the 2020 and 2021 surveys showed this effort is worth it, as our social connection score increased year over year.
Each year, company management reviews the scores and responses then shares the overall results with all employees, including our score by category, change in score from last year and common themes from the responses to open-ended questions. We explain that company management will use the results of the survey as a guide when developing initiatives and setting priorities for the coming year. In this way, our employees know they have made an impact.

Evolving Our Approach

The Perr&Knight employee survey is constantly evolving. We review the survey’s questions and make minor tweaks every year. Over the past six years, we have expanded the engagement survey to 90 questions. We recently changed the “Fairness” category to “Diversity, Equity and Inclusion,” with the aim of identifying and addressing any DEI issues within our organization.
We also added open-ended questions to provide opportunities for staff to share their thoughts. Some examples of open-ended questions are as follows:

How can social connection be improved within Perr&Knight?
How could Perr&Knight’s company vision be more clearly communicated?
If there was one thing that you could immediately change about Perr&Knight, what would that be and why?

While the numerical scores to the positive statement questions help us evaluate how we’re doing, the open-ended questions are a source of inspiration. We are fortunate that our smart, creative staff members are willing to share their ideas, as we are always happy to listen.
Employee engagement is a characteristic of a thriving insurance consulting firm. At Perr&Knight, we are not content for our employees to simply be “comfortable” or “satisfied.” We want our teams to be truly engaged in the work they do and proud of the company they represent. In addition, valuing our employee’s opinions and providing a safe space for all to share their diverse perspectives will continue to be hallmarks of Perr&Knight’s culture as we grow and serve the industry. As such, we plan to survey our employees in the future so they can continue to drive change.

Interesting in joining the team at Perr&Knight? Visit our Careers page and browse our open positions.

COVID-19 Effects on State Filings

by Tanya Goerg

Authors: Tanya Goerg, CPU, ARC, AINS and Scott Whitaker, MCM
The ripple effects of the COVID-19 pandemic continue to reverberate throughout the insurance industry. As with nearly all businesses, insurance industry personnel and insurance regulators had to make an immediate and sudden shift to remote work which also immediately impacted form, rate, and rule filings. While improvement has been noted over time, the industry continues to experience impacts such as staffing challenges, increased volume of filings, and in some states, continued delays in review, acknowledgment, and/or approval of filings.
Facing pressure from legislators to provide relief for struggling consumers, Departments of Insurance (“DOIs”) also scrambled to issue bulletins and notices that outlined greater consumer protections.
Here are some of the key pandemic-related impacts on state filings we are observing.

Pandemic/communicable disease exclusions

Many DOIs have temporarily or permanently adjusted their position–through bulletins/notices or filing interrogatories–on exclusions specifically related to “pandemic” or “communicable diseases.” The DOIs are not allowing exclusions, requiring language changes, or allowing only with sub-limits.
While these DOI positions are primarily noticed with new program filings, they may also be experienced with form, rate, or rule update filings associated with “pandemic” or “communicable disease” exclusions.
It’s important to know that legislative activity regarding this issue is far from settled. Litigators in many states are encouraging legislators to strip away or modify pandemic-related exclusions, but whether these remain a permanent aspect of new state filings is unclear at this point.

Rate relief & telematics in auto

Regional lockdowns dramatically reduced the amount of traffic on the road, shifting the landscape for insurance premium calculations and opening the door for consumer refunds.
As of February 2021, the insurance industry as a whole returned nearly $14 billion in premium to insureds. Regarding rates and rules for auto programs, some states required one or more rate relief filings, while others prohibited or limited rate increase filings. This has had a major impact on the bottom line for many insurance entities.
While the number of hours spent on the road was down during 2020 and early 2021, the severity of claims is up. During this period, open roads, less police presence, and increased road rage incidents fostered conditions that resulted in more catastrophic damages.
Many states allow telematics usage and pay-per-mile policies for automobile insurance. These technologies provide a benefit to consumers, especially now that many workers are no longer commuting to an office. Incorporating telematics into programs helps insurance entities develop products that better fit the driving habits of consumers, today and post-pandemic.

State-specific bulletin updates

Several states issued bulletins and notices that clearly articulate pandemic-related regulatory updates. Here are some noteworthy changes:
Nevada – In June 2020, The Nevada Division of Insurance issued a notice that they would disapprove any new business policy filings that contain COVID-19/virus/pandemic exclusions.
California – As of April 2021, California insurance regulators are beginning to review commercial rate filings that were previously subject to rate freeze requirements, but no rate increase filings have been approved for any lines that California considers to be impacted by the pandemic as of September 2021. They are now considering allowing filings that include sub-limits to COVID-19 exposure.
New Mexico – Regulators at the New Mexico Department of Insurance issued a bulletin in December 2020 stating that at least until the end of the 2021 legislative session, a moratorium will be in place on any filings that include endorsements related to COVID-19/communicable disease/virus. The 2021 legislative session has ended; however, the moratorium remains and it’s unclear how long this position will remain in place.

Objection-based findings

Due to the volume of state filings the team at Perr&Knight handles annually, we have observed some key Department positions in states that have not formally communicated their position through bulletins/notices or other official DOI communication channels. These findings are based on recent interrogatories.

Vermont – The Vermont Department of Financial Regulation will approve pandemic-related exclusions if they are no more restrictive than approved Insurance Services Office (“ISO”) or American Association of Insurance Services (“AAIS”) language.
Idaho – Idaho continues to disapprove COVID-19/pandemic exclusions, sub-limits, or any other coverage caps related to the current pandemic. That said, the use of the word “current” indicates this Department position may not be permanent.
West Virginia – West Virginia Offices of the Insurance Commissioner are currently disapproving any new exclusions related to the COVID-19 pandemic.

The pandemic’s long tail

The end date of many of the above changes is unclear. In fact, many of these temporary state requirements may eventually become permanent. New and carryover legislation continues to add wrinkles to an already unclear landscape. If those making state filings are unaware of these shifts, they may end up receiving a barrage of interrogatories that can severely impact their programs’ speed-to-market.
Working with experienced actuarial and product design consultants like the experts at Perr&Knight can help insurance entities avoid these pandemic-related filing pitfalls. In addition to ongoing boots-on-the-ground experience with regulatory requirements in all 51 jurisdictions, we proactively monitor regulatory positions to make sure our clients are aware of any updates that affect their state filings. We also internally track interrogatories to determine which issues may provoke regulatory pushback, even if currently unpublished. This level of detailed insight can help insurance entities stay on top of filing requirement changes, which can ultimately lead to speedier approvals, even in times of uncertainty.

Let our actuarial and product design experts help you make filings even easier. Contact Perr&Knight today to start the conversation.

7 Reasons to Perform a Mock Market Conduct Exam Right Now

by Scott Whitaker

Operational gaps and regulatory compliance violations are a constant threat to agents, insurers, InsurTechs, managing general agents (“MGAs”), third-party administrators (“TPAs”), and others operating in the U.S. property and casualty insurance market.
Compliance penalties are serious and can include cease and desist orders, consent orders, fines, license suspensions, or the loss of the company’s certificate of authority. Internal inefficiencies, lack of proper controls, insufficient analysis or testing of processes, and/or unfamiliarity with regulatory requirements are often the cause of the violations resulting in penalties.
However, those operating in the insurance market are not sitting ducks for regulatory action. Avoiding these risks – and mitigating their consequences – is possible through mock market conduct exams.
Here are seven reasons why you should undergo this valuable self-assessment as soon as possible.

1. Identify risks before regulators do

Regulators expect you to understand insurance regulatory requirements and be able to demonstrate compliance. Mock market conduct exams compare your processes, procedures and output, such as premium and claim files, to requirements to validate compliance or to identify gaps and provide recommendations for remediation.

2. Protect your reputation

Beyond the lost time and high costs of state Department of Insurance (“DOI”) penalties, negative findings from regulatory bodies can jeopardize your reputation with policyholders, shareholders, your current and potential customer base, and the industry at large. Operational gaps and compliance violations may also bring damages in possibly the most impactful form, that of long-term reputational risk and negative financial impact, such as devaluation of stock or a downgrade in AM Best rating. Conducting regular mock market conduct exams enables you to move forward with confidence that your company will stand up to regulatory scrutiny in the event you undergo an examination.

3. Be proactive with DOIs

Most states encourage you to report issues you surface internally and often allow you to do so in a confidential manner. By conducting self-assessments, and reporting as appropriate, there is often a longer runway for completing the remediation process which allows you to take a more deliberate and planned approach instead of disrupting workflow by shifting your teams’ attention to responding to regulatory requests, which are most often more time sensitive.

4. Reveal “what you don’t know”

Mock market conduct exams are particularly useful for InsurTech companies or companies that are new to the insurance space. The insurance industry contains many regulatory requirements (both obvious and obscure) that can require comprehensive operational protocols and controls. Working with an experienced insurance compliance services partner fast-tracks the awareness and correction of compliance and operational issues that may have otherwise remained hidden until identified through the hands of regulators.

5. Remove blind spots

Compliance is a top consideration for most who operate in the insurance market, but it’s often difficult for internal business units to conduct detailed reviews of processes in which they are already deeply immersed. “Business as usual” is great for achieving day-to-day efficiency, but internal teams may be unaware of their own blind spots. Working with an outside insurance compliance services provider on a mock market conduct exam brings an independent perspective that can reveal previously unseen procedural weaknesses and/or compliance gaps.

6. Correct issues before they become problems

Small issues tend to quietly compound until they become complex, costly problems. Mock market conduct exams can identify if you have correct, efficient processes in place to address regulatory requirements and/or inquiries from regulators or alert companies to ineffective processes that could lead to violations down the road.
For example, a review of policy files may identify that the rates and rules loaded into the policy admin system and/or forms issued to the policyholder are different than those on file with the regulatory authority.
Identifying gaps and/or non-compliance ahead of a DOI inquiry or action enables you to correct these issues before they cause widespread non-compliance.

7. Prevent costs from spiraling

Mock market conduct exams are controlled investments that protect you against expensive DOI examinations. When examiners from regulatory authorities perform a desk exam or arrive on-site to administer an exam, your company will be on the hook for their time and travel expenses. DOI exams can be more than three times more expensive than conducting a mock market conduct exam with an experienced insurance compliance services partner. Time, fines and reputational harm impact your bottom line; mock market conduct exams improve the likelihood of shorter exams, less business interruption and fewer regulatory actions.

Partner with experts

At Perr&Knight, our depth of operational and compliance knowledge enables us to conduct thorough mock market conduct exams that are relevant to today’s regulatory landscape. We also offer related services including Operational Process and Documentation Reviews and DOI Exam Preparation / Response Training and Guidance.
Performing a mock market conduct exam allows you to proactively obtain an understanding of your operations before gaps and compliance violations result in regulatory action.

Contact the insurance compliance experts at Perr&Knight to discuss your operational needs or schedule a mock market conduct exam.

A&H Insurance Advertising: Rules & Compliance Overview

by Susan Cornett

Advertisements are an integral part of any A&H insurance marketing plan. Insurance companies must find ways to get and keep the attention of a prospective insured. Given that the average American sees more than 4,000 advertisements each day, insurance companies look for creative ways to attract prospective insureds. However, it’s not as simple as writing a clever ad. Insurance companies are subject to various levels of regulation and process requirements.

What is an advertisement?

An advertisement is any material that is published, printed, scripted, or displayed to a consumer. This includes, but is not limited to, postcards, electronic communications, billboards, radio or TV ads, and websites. It can also include sales talks and presentations for use by agents, brokers, producers, and solicitors.
Advertisement includes advertising material sent with a policy when the policy is delivered and material used in the solicitation of renewals and reinstatements. It also extends to the use of all media for communications to the general public, to the use of all media for communications to specific members of the general public, and to the use of all media for communications by agents, brokers, producers and solicitors. The definition of advertisement casts a wide net.

What rules apply?

Insurance advertisements are subject to federal, state, and in some cases, local statutes, regulations, and ordinances. At the federal level, insurance companies must review HIPAA marketing regulations and the CAN-SPAM Act.
The HIPAA regulation defines marketing materials as a communication about a product or service that encourages recipients of the communication to purchase or use the product or service. Applicability of the act depends on the recipient and the service or product in the communication.
CAN-SPAM sets the rules for commercial email, establishes requirements for commercial messages, and provides penalties for violations.
In addition to the federal requirements, most states have adopted some version of the NAIC’s Advertisements of Accident and Sickness Insurance Model Regulation. This regulation defines advertisements and sets forth requirements for content, control, and filing requirements. Most states require insurance companies to file Medicare Supplement and long-term care ads, but some states require that all advertisements be filed. At the local level, city and county ordinances control signage, such as those seen in traffic medians or attached to light poles.

Who controls advertisements?

Insurance companies have a duty to maintain control of their advertisements, whether those ads are created by a home office employee, a broker, or an independent agent. Insurance companies must have procedures in place to establish and maintain a system of control over the content, form, and method of dissemination of all of its advertisements.
According to our insurance support services experts, best practices include a formal advertising approval process, tracking, and record retention. States rely on insurance companies to self-monitor their advertising procedures and require a signed certification of compliance each year with the annual statement filing.
While A&H advertising requirements can be overwhelming, it’s also important to note that most states have adopted the same basic requirements with respect to content. It’s usually not necessary to create 51 versions of an ad, although there are almost always state variations.

Next steps

Whether the advertising campaign is one jurisdiction or fifty-one jurisdictions, insurance companies must understand requirements for content, filing, and distribution. Contact the insurance consultants at Perr&Knight to learn how we can provide insurance support services for advertising review and the development of processes and procedures to manage advertising.

Buying a Shell? Make Sure You’re Getting What You Paid For

by Perr&Knight

It’s a busy time for insurance companies considering acquiring a shell as a means of starting a new company or growing their operations. Many insurers are aware that reactivating operations in a shell company that has been granted licenses but isn’t currently writing policies is a shortcut to quickly enter into new jurisdictions or lines of business.
However, investing in a dormant shell without thoroughly exploring its limitations can create expensive headaches down the line. Here are some key issues to consider before inking the deal on a shell company to make sure you’re getting what you are paying for.

Mapping: A Crucial Step

Purchasers run into challenges by not recognizing that states all have their own lines of business (LOBs) definitions and associated requirements. What works in one state or for one line of business is not guaranteed to suffice in another. NAIC, Annual Statement, and Certificate of Authority lines all vary by jurisdiction.
There are multiple ways to define a line of insurance: what you are reporting under vs. what you are filing under vs. what you are actually offering. Each state is entirely different, and it is easy to get lost (or stuck) in the weeds. Detailed mapping ensures you can see the full picture of the LOBs you are acquiring and their levels of completion in the eyes of each state’s Department of Insurance (DOI).
Partnering with insurance company licensing and state filings experts alleviates the crucial but time-consuming task of LOB mapping. At Perr&Knight, our licensing and filings departments are deeply familiar with each state’s unique nuances, so we can produce valuable charts that provide an “apples-to-apples” comparison of all the information.
Before purchasing a shell, clients tell us which products they are considering and which coverage they plan to offer. We help map annual statement lines, product filing lines, and Certificates of Authority lines to ensure the company has everything they need to write their planned business.

The Seasoning Conundrum

Many companies buy shell carriers because they are facing seasoning issues that limit their expansion goals. “Seasoning” means state DOIs are essentially saying, “Figure this out in your own state before you try to figure it out in ours.”
Some states want direct written premium seasoning: even if the company didn’t exist previously in the state, the company must have written that specific line before being permitted to do so in a new state. New insurance companies facing operational seasoning issues can circumvent this conundrum by acquiring a shell and re-activating its licenses in the desired state. Ascertaining whether there will be seasoning issues and related challenges such as capital and surplus issues or special deposit requirements will help your company navigate seasoning requirements more smoothly.
Partner with insurance company licensing and state filings experts to proactively identify potential roadblocks and develop a plan to address each. This allows you to gauge whether a particular shell will pay off, or if you will be required to invest more than originally anticipated.

Correct Form A Filings are Crucial

Even if your company is currently licensed countrywide, you must obtain approval from your resident state for the shell purchase by filing Form A. You must file Form A before adding any lines or expanding into a new state.
Once approved, then comes the time-consuming process of filing change-of-ownership and post-purchase notifications in all other states. Once again, partnering with experts to manage the process saves time and ensures correct form filing.

Control Costs by Partnering with Insurance Company Licensing and State Filings Experts

While your company’s general counsel may offer support for performing due diligence on your proposed shell acquisition, they likely don’t possess the necessary experience to anticipate red flags and hot button issues for the various state DOIs. As they sort out the complexities, it could add cost to the licensing process.
Working with an experienced partner like Perr&Knight – whose licensing and state filings teams are dedicated solely to supporting insurance companies – delivers better value for a more reasonable cost.

Manage Your Expectations

Buying a shell company is a smart move for insurance carriers looking to expand. A previous company has already cleared the way into a new market, which should theoretically make things easier for you. However, like many aspects of the insurance industry, states are slow and regulatory difficulties can stall – or completely derail – companies that aren’t prepared.
When acquiring a shell, it’s important to set reasonable expectations. Though faster than launching a new line of business from scratch, navigating the nuances of each state’s filing process is both detailed and time-consuming. There are no shortcuts.

Are you evaluating whether or not a particular acquisition is right for your company? Let our licensing and state filings experts make sure you are getting what you’re paying for.

You Better Watch Out, You Better Not Cry, State Filing Requirement Changes Are Already Here!

by Jessica Witvoet

Authors: Neresa Torres, Jessica Witvoet, API, AIS, AINS, AIT, and Diane Karis,AINS, CPCU
At Perr&Knight, we submit thousands of product filings (rate, rule and form) a year to the various state Departments of Insurance (“DOIs”) – and 2020 has been no exception. In fact, in addition to our normal annual volume of insurance product filings, COVID-19 has increased the number of state filings for pandemic-related submissions.
Throughout the course of this year, we have noticed a few trends in how states’ DOIs are reviewing product filings. Since we handle a high volume of submissions across all jurisdictions and all lines of business, we are able to quickly identify variations from previous years.
Here’s what we have discovered.

States are getting pickier about the rules

Though states have always clearly articulated their filing guidelines, in preceding years DOIs were more likely to excuse minor deviations and process those filings anyway. DOIs in the past may have been inclined to give some leeway. This year, however, many states are opting to exercise their right to issue an objection or reject a filing outright if every detail is not spot on. Small errors that may have been “no big deal” in the past are now grounds for review or disapproval.
For example, Idaho is now closely scrutinizing the status of the filing in the domicile state. In the past, a “pending” entry or concurrent submission of domicile state was acceptable. Now, it is required that the program being filed is approved by the domiciliary state prior to submitting the filing in Idaho. Unless there is a reasonable explanation as to why, the filing will be rejected or subject to a 7-day turnaround for correction. If the information is not included at all, the filing is often disapproved without any opportunity for correction. Kansas has become more finicky, too, requiring each rule filing to have an accompanying form, or an objection will be issued. Other states have implemented guidance tools and checklists to ensure compliance with changing rules and requirements. For example, Massachusetts has created a four-part instruction guide to cover what is required for a filing to be considered acceptable.
The point is: don’t rely on DOIs being as forgiving as they have been in previous years. Make sure all your filing details are correct and complete.

Objections, rejections, and time-to-approval are increasing

Insurers are not the only ones experiencing administrative delays due to the pandemic. Many state DOIs shifted to remote working scenarios as well, and this has impacted their ability to issue speedy approvals. In California, for example, commercial, homeowners’, and other personal policies are taking longer to receive approval than in years past. The number of “pending” approvals has also increased.
Closer scrutiny by state DOIs is resulting in a higher number of rejections for minor issues. On the bright side, turnaround times for re-submitting are also faster. In many instances, we have seen DOIs allow re-submission within 7 to 10 days.
If your filing is rejected, correct the problem immediately and resubmit right away. Sophisticated software solutions like Perr&Knight’s StateFilings.com can help your teams keep a closer eye on filing status.

Other events impacting 2020

In addition to the disruptions caused by the pandemic, social unrest, and an election year, insurers are facing other challenges, such as recertification of the Terrorism Risk Insurance Act (TRIA), which requires all companies to update their language. Travel insurance products are also changing quickly as travel restrictions are lifted and added on a rolling basis worldwide.
This year’s regulatory requirements compel insurers to take a closer look at forms to make sure each meets the DOI’s current standards, which may have been updated recently.

Keeping track of the trends

2020 has been a year of surprise rejections for some insurance companies. It makes sense: companies only submitting a few filings per year – or who haven’t updated their product in recent years – lack the macro perspective to spot trends in DOI behavior.
When a rejection is received, it is important to determine as quickly as possible if the rejection is a unique occurrence or due to a change in a procedural requirement by the DOI. When submitting new filings, comparing against historical filings is no longer enough. Instead, it will be important to keep close track of current trends, as well as to look deeper into the DOI’s reasoning. This insight will help you avoid costly, time-consuming errors moving forward.
Internally, the Perr&Knight state filings department takes note of every rejection/objection we encounter and evaluates it to discover if it is part of a larger directional shift for that DOI, or simply a one-off. When we have questions about a particular DOI action, we contact the reviewer immediately and obtain a more thorough explanation. Because we handle such a high volume of nationwide filings, we remain in regular communication with every state DOI. These strong relationships enable us to obtain clarification on department actions that guide future filings on behalf of our clients.

Work with an experienced partner

Staying compliant today presents more of a challenge than it has in years past. Because the landscape is shifting quickly (as quickly as the insurance industry can shift), insurers are at higher risk of receiving rejections – especially those who submit a relatively low number of filings per year.
This is where working with an external insurance filings support partner can deliver a dramatic difference. Experienced state filings teams manage filings day-in and day-out. Their level of intimate knowledge of each transmittal requirement, variations between states, and regulatory expectations for each line of business can mean the difference between a smooth approvals process or being sent back to square one.
As 2020 draws to a close, the winds of change continue to shift. We expect more deviations from the status quo in the coming year. We’ll keep our clients posted on what we discover and how they can stay ahead of the game.