Modernization Boosts Speed to Market

The more states that opt into the NAIC's Interstate Insurance Product Regulations Compact, the better off carriers will be.

SERFFing USA

Currently, the compact endorses the use of the System for Electronic Rate and Form Filing (SERFF). "Although all of the states are using the SERFF system, they are not using it for all lines of business," relates Poolman, who stresses that the average turnaround time for files using SERFF is 20 days or less. "That is true speed. The number of filings coming in [via SERFF] are already up 200 percent over last year because more companies are using it and getting results," he adds.

Individual state insurance departments that opt into the compact will also adopt national standards for certain products that have been outlined by the NAIC's Interstate Compact National Standards Working Group. So far, the group has come up with standards for variable and individual annuities. And it's currently in the process of developing standards for long-term care and individual disability income insurance. Additionally, it will soon hear comments on product standards for individual term life insurance and individual flexible premium adjustable life insurance.

At press time, Colorado, Iowa, Maine, Utah, Virginia, West Virginia, Hawaii and New Hampshire had adopted the compact. Vaughn reports that as of next year a total of 30 states are expected to have opted into it. But, though insurers' efficiencies will grow along with adoption levels, optimum efficiency can only be gained once all states opt into the compact.

Even if one state doesn't participate in the compact, insurers that underwrite in that state will have to customize their product offerings when marketing there. Conversely, if all states opt into the compact - as the NAIC hopes - carriers that underwrite in multiple states will only have to worry about a single product standard.

"A company like Prudential operates in all of the states so [in the absence of product standards] they need 50 separate product approvals," Vaughn explains. She stresses that the arduous process of getting products to the marketplace also places pressure on a carrier's IT department. She relates that IT resources are strained as multiple state laws are tracked and carriers must generate corresponding forms for all of the disparate product rules.

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