PURPOSE: This rule implements the purposes of section 374.185, RSMo, and establishes uniform standards for the division utilizing market analysis to evaluate the market conduct of insurers and to develop cause for issuance of an examination warrant pursuant to sections 374.202 to 374.207, RSMo.

1. (1) The director is responsible for market regulation of insurers for Missouri policyholder protection and shall utilize market conduct actions, including market analysis, investigations, desk examinations, targeted examinations, and comprehensive examinations of insurers. Such actions shall be pursued by the division in a manner consistent with the purposes of section 374.185, RSMo. In furtherance of such purposes and to provide uniform standards designed to avoid arbitrary or capricious use of discretion in issuing warrants for market conduct examinations, the division shall apply the following standards in utilizing market analysis: FINANCIAL INSTITUTIONS AND PROFESSIONAL REGISTRATION

   1. (A) The division shall gather information from data currently available to the division, as well as surveys and required reporting requirements, information collected by the National Association of Insurance Commissioners (NAIC) and a variety of other sources in both the public and private sectors, and information from within and outside the insurance industry from objective sources, information from web sites for insurers, agents, and other organizations, and information from other credible sources;
   2. (B) Such information shall be analyzed in order to develop a baseline understanding of the marketplace and to identify for further review insurers or practices that deviate significantly from the norm or that may pose a potential risk to the insurance consumer;
   3. (C) The NAIC Market Regulation Handbook, and other handbooks adopted by the NAIC, shall be used by the division as a guide in performing this analysis;
   4. (D) The division shall identify key lines of business for systematic review; and
   5. (E) The division shall identify companies for further analysis based on available information.

2. (2) If the analysis supports further investigation or review by the division into a particular insurer or practice, the following continuum of market conduct actions may be considered prior to requesting a warrant for an examination. These actions may include, but are not limited to the following:

   1. (A) Correspondence with insurer;
   2. (B) Insurer interviews;
   3. (C) Information gathering;
   4. (D) Policy and procedure reviews;
   5. (E) Interrogatories; and
   6. (F) Review of insurer self-evaluation, if not subject to a privilege of confidentiality, and compliance programs, including membership in a best-practice organization.
3. (3) Any such materials or documents reviewed by the division pursuant to section
4. (2) of this rule shall be treated as confidential in accordance with the provisions of section 374.205.4, RSMo.
5. (4) The division shall take those steps reasonably necessary to eliminate requests for information that duplicate information provided as part of an insurer’s annual financial statement, the annual NAIC market conduct statement, or other required schedules, surveys, or reports regularly submitted to the director, unless the information is state specific. AUTHORITY: sections 374.045, 374.190, and 374.205, RSMo 2000 and section 374.185, RSMo Supp. 2007.* Original rule filed April 1, 2008, effective Nov. 30, 2008.

*Original authority: 374.045, RSMo 1967, amended 1993, 1995; 374.185, RSMo 2007; 374.190, RSMo 1939, amended 1949, 1967, 1992; and 374.205, RSMo 1992, amended 1997, 1999.