In an effort to increase carriers' speed to market and reduce transaction costs by creating uniformity in the review of products nationwide, the National Association of Insurance Commissioners (NAIC, Kansas City), began the limited launch of the Coordinated Advertising Rate and Form Review Authority, or CARFRA, through the System for Electronic Rate and Form Filings (SERFF). CARFRA provides a single point of filing and review, along with national standards for insurance products. Ten states, comprising 35 percent of national premium volume, are participating in the launch, which began May 1.
SERFF, which will act as the conduit for CARFRA, is an NAIC software program that companies can use to submit form and rate filings. The filings, once they are routed to CARFRA are sent to the coordinating state, which is Michigan for the limited launch. The coordinating state then selects five states to make up the review team. The reviewer who is designated the team leader, will coordinate communications with the insurer through the SERFF system. With the CARFRA system, insurers will know within 30 to 45 days whether a filing is acceptable in CARFRA states.
All 10 states have agreed to a set of uniform national standards that will provide the basis for the CARFRA team review. Deviation from the standards must be reported to CARFRA.
"This is a response to the industry's desire to improve and evolve the rate filing process," says Randy Rohrbaugh, active deputy commissioner for rate and policy information, NAIC. "Laws aren't uniform in every state," and sometimes the filing process for a nationwide carrier is costly and redundant. There has been a joint initiative to increase a carrier's speed to market and CARFRA is the solution, he adds.
According to Diane Koken, Pennsylvania Insurance Commissioner, and co-chair of the NAIC's CARFRA working group, "This program helps protect consumers through a more uniform and efficient state regulatory system, while speeding up the process for bringing new products to market."
NAIC plans to expand CARFRA in the future. "We want to add products and states as we go forward," but the NAIC is making sure the system works well in the pilot before it adds more states to CARFRA, says Rohrbaugh. "We hope to add more states to CARFRA within the first year of our launch."