Best Practices in Insurance Licensing Forum. Agenda 10:00 – 10:30Welcome and Opening Comments Sonya Dungey, Director of Licensing Michele Riddering, Licensing

Best Practices in Insurance Licensing Forum

Agenda

• 10:00 – 10:30 Welcome and Opening CommentsSonya Dungey, Director of Licensing

Michele Riddering, Licensing Manager

• 10:30 – 10:50 Consumer Services DivisionKristie Taber, Manager – Communications Center and Consumer AssistanceRegan Johnson, Manager – Market Conduct

• 10:50 – 11:00 Legislative UpdateJenita Moore, Deputy Commissioner – Policy

• 11:00 – 12:00 Producer Licensing Guiding Principles Deborah Canja, Deputy General Counsel – Office of General Counsel

• 12:00 – 1:00 Lunch

• 1:00 – 1:30 DOB Conversion: Continuing EducationTracy Lord Bishop, Education Administrator

• 1:30 – 2:30 Business Entity LicensingJennifer Childs, Licensing AnalystSueEllen Tyszkiewicz, Licensing Analyst

• 2:30 – 3:00 Technology UpdateTerri Mann, Technology Specialist

• 3:00 – 3:15 Break

• 3:15 – 4:30 Entry Level Licensing ExamsPaige Colley, Testing SpecialistTadas Dabsys, Vice President – PSI ServicesNikki Shepherd Eatchel, Vice President – PrometricDr. James Fryer, Senior Sales Executive – Pearson VUECraig Johnson, Client Services Manager – Prometric

• 4:30 – 4:45 Problem Applications

Tracey Peck, Producer Licensing Specialist

• 4:45 –5:00 Questions & AnswersAdjournment

NEXT

Review of NAIC Compliance

Since 2007, OFIR has increased uniformity with NAIC by….

Pre-Licensing EducationBackground Checks

Licensure Application

Continuing Education



Limited Lines

Surplus Lines

Commercial Lines

Commissions






Hours Required Waiver / Exemption

Restore





Continuing EducationState-wide Criminal History

Restore





Continuing Education6 Major LOA’s

Core Limited Lines

Restore






Term of Compliance

Restore



Limited Lines

Surplus Lines

Commercial Lines

Commissions Multiple Exemptions

Restore



Limited Lines

Surplus Lines

Commercial Lines

Commissions

Commission Sharing

Restore

Restore



Limited Lines

Surplus Lines

Commercial Lines

Commissions

Surplus Lines Exam



Limited Lines

Surplus Lines

Commercial Lines

Commissions

CE Requirement – Resident ProducersRestore

Licensing Population

Active Resident Licensees as of December 31, 2009

Individual Producer 55,594Individual Producer – Surplus Lines 332

Business Entity Producer 8,325

Business Entity Producer – Surplus Lines 138

Adjuster for the Insured 123

Insurance Adjuster 1,762

Counselor 931

Solicitor 1,453

Resident License Total: 68,658

Licensing Population

Active Non-Resident Licensees as of December 31, 2009

Individual Producer 119,430

Individual Producer – Surplus Lines 1,074

Business Entity Producer 8,100

Business Entity Producer – Surplus Lines 346

Adjuster for the Insured 87

Insurance Adjuster 5,645

Counselor 37

Non-Resident License Total: 134,719

Michigan Total Insurance Population: 203,377

Insurance Licensing Bulletins

• Bulletin 2010-06-INS: Approval of New Contract Form for Adjuster for the Insured Residential Contracts

• Bulletin 2010-05-INS:

Insurance Crop Adjuster Licensing

• Bulletin 2010-01-INS:

Designated Responsible Licensed Producer Affiliations

• Bulletin 2009-15-INS:Insurance Producer Variable Life/Variable Annuities Line of Authority (supersedes Bulletin 1990-04)

http://www.michigan.gov/documents/dleg/Bulletin_2010_06_INS_311580_7.pdf

http://www.michigan.gov/documents/dleg/Bulletin_2010-05-INS_310979_7.pdf

http://www.michigan.gov/documents/dleg/Bulletin_2010_01_INS_306818_7.pdf

http://www.michigan.gov/documents/dleg/2009-15-OFIR_301023_7.pdf

Consumer Services Division

Kristie Taber, ManagerCommunications Center and Consumer Assistance

Regan Johnson, ManagerMarket Conduct

Consumer Assistance Section

• Assists consumers with insurance and financial services problems and questions

• OFIR received approximately 5,618 consumer complaints last year:

3,051 Insurance1,042 Blue Cross & HMO1,030 Consumer Finance 165 Securities 330 Credit Unions/Banks

• Total recoveries over $16 million

Our Goals

Educate the consumer

Make sure the consumer is treated fairly and within standard business practices

Ensure compliance with statutes

Complaint Statistics by Reason & Coverage

• Accident & Health 50%• Homeowners 12%• Auto 20%• Life 9%• Annuity 5%• Liability 2%• Fire & Commercial 2%

• Claim Handling 46%• Customer Service 26%• Underwriting 9%• Marketing and Sales 8%• Non-compliance 11%

Common Insurance Complaint Issues

• Misrepresentation/Unsuitability in the Sale of Equity Indexed or Variable Annuities and Universal Life Policies

• Rating Complaints:- Long Term Care Rate Increases- Affordability of auto and home insurance- Availability and affordability of health insurance

• Medicare Supplement Duplication of Coverage• Fiduciary Violations• Claim Issues

– Health Insurance Claim Denials– Automobile – Personal Injury Protection – Homeowner

Business-To-Business Complaints

• Business-to-Business complaints handled by Investigations Section

• OFIR will not intervene in contractual disputes :- Do not review questions regarding payment of commissions, etc.

• If dispute involves alleged violation of Insurance Code, may review with supporting documentation

Complaint Process

1. Complaint arrives – must be submitted in writing

2. Assigned to analyst by topic

3. Forwarded to insurer and/or agent for response- Response due in 21 calendar days- Fine imposed for failure to respond- Company cannot respond on behalf of agent- Must respond in duplicate

4. Analyst reviews response and documentation submitted by licensee and consumer

Complaint Process

5. Complaint analysts are impartial in their review- Documentation submitted is crucial to their determination on file

6. OFIR will determine- Is consumer harmed by activity?- Is activity in violation of Insurance Code?

7. Analyst makes file determination:- Request additional information- Close complaint; closing letter sent to consumer- Refer to Investigations for review and action

Common Violations & Referrals

• Unlicensed Activity/Fraud• Fiduciary issues; premiums not remitted, misappropriation/embezzlement of funds• Binding coverage without appointment with insurer• Public Adjuster

– Charging fees in excess of 10% allowed– Advancing money to insured– Not maintaining required records– Soliciting insured at the scene of the fire– Requiring their name on all settlement checks to the insured

• Agent forgery• Agent misrepresentation of insurance policy• False and/or misleading advertising• False statements relative to an application for insurance• Rebating

What We Can & Cannot Do

• Act as court of law• Act as an attorney or give legal

advice• Take action in matters involving

internal affairs of a business

• Investigate complaints against persons and business entities accused of violating Insurance Code

• Interpret statute• Bring administrative actions or refer

to Attorney General for civil or criminal prosecution

Summary

Purpose of Consumer Assistance is to:

Ensure consumers are treated fairly and in accordance with the law

Detect violations of law and take appropriate action

Legislative Update

Jenita Moore, Deputy CommissionerPolicy Division

Producer Licensing Guiding Principles

Deborah Canja, Deputy General CounselOffice of General Counsel

The Internet: Popular Sites for Locating People

• Directory Assistancemasterfiles.comargali.com

• Free Databasesgoogle.comzabasearch.compeoplefinder.comyahoo.comaltavista.commyfamily.combirthdatabase.comzoominfo.com

• Fee Based Databasesirbsearch.commerlindata.comlocateplus.comtracers.comflatrateinfo.compallorium.comskipsmasher.com

The Internet (cont.)

• Blog Searchingblogsearch.google.comtechnorati.comdaypop.comjournalspace.comblogdigger.comeasyrss.comfeedster.comblog.com

• Directory of Public Recordssearchsystems.netpublicrecordcenter.com

• Registered WWW Domainnetworksolutions.com

• Business Searchesgoliath.ecnext.commanta.comguidestar.org

• Additional Avenueslexisnexis.comnexis.comaccurint.com

The Internet: Michigan Courts/Services Online

55th District, Mason67th District, Flint61st District, Grand Rapids89th District, Cheboygan

co.genesee.mi.usoakgov.com/courtsmacombcountymi.govcourts.ingham.org ($11)

• Michigan v. Florida v. California online culture

• Years computers search• Offender Tracking Information

System (OTIS)• Michigan State Police ICHAT

Service

Lunch

Main ConcourseUpper Level

DOB Conversion: Continuing Education

Education AdministratorTracy Lord Bishop

Continuing Education Review Date

Previous Method

New Method

Example A

Example B

Previous method used a combination of:

The Last # of Social Security Number

First letter of last name

Example C

Example D

Example D


Previous Method

New Method

Example A

Example B

The new method uses a combination of:

Birth Year Birth Month

Odd Birth Year

• First day of birth month, 2011

• Repeat every 2 years

Review Date:Even Birth Year

• First day of birth month, 2012

• Repeat every 2 years

Last completed CE review date:

• 2008 – new review date in 2011


Last completed CE review date:



Example C


Previous Method

New Method

Example A

Example B

John Doe Date of Birth:

January 26, 1980 & last CE date 6/1/09

Example A

CE Review Dates

• Jan. 1, 2012

• Jan.1, 2014

Example C

Example D


Previous Method

New Method

Example A

Example B

Jane Doe Date of Birth:

May 15, 1981 & last CE date 2/1/08

Example B

CE Review Dates

• May 1, 2011

• May 1, 2013

Example C

Example D


Previous Method

New Method

Example A

Example B

Mrs. Smith

Date of Birth:

Dec 14, 1968 & last CE date 1/1/08

Example C

CE Review Dates

• Dec 1, 2010

• Dec 1, 2012

Example C

Example D


Previous Method

New Method

Example A

Example B

Mr. Smith

Date of Birth:

June 10, 1972 & NEXT CE date

6/1/10

Example D

CE Review Dates

• Sept. 1, 2010

• June 1, 2012

Example C

Example D

90 Day Extension:

If your CE review date is within the first 6 months of 2010, you are allowed a 90 day extension.

Business Entity Licensing

Jennifer ChildsSueEllen Tyszkiewicz

Licensing Analysts

Electronic Business Entity Applications

• Submitted via the NIPR gateway at www.nipr.com as of March 22, 2010

http://www.nipr.com/

• AG Opinion #7242: Section 213(1) of the Business Corporation Act,

1972 PA 284, MCL 450.1213(1), does not require a corporate insurance agency that includes the word "insurance" in its name to also include the word "agency," and a corporate agency is free to use the word "insurance" in its name so long as the name, taken as a whole, does not imply that the agency is an insurance or surety company.

Naming of Business Entities

Make sure DRLP(s) for all lines of authority are requested on the application

Submit ALL dates of birth

Disclose ALL information

How to Prevent Delays in Application Processing

DRLP

Designated Responsible Licensed Producer:

This producer is responsible for a business entity’s compliance with state insurance laws, rules and regulations.

What is a DRLP?

DRLP

Business entity applicants must designate one or more individuals as the agency’s DRLP for EACH line of authority for which the agency is applying.

What changes were made?

DRLP

If any one of the following occurs, the business entity has 14 days to solve the problem:

The 14 Day Notice

The only DRLP of the agency loses a line of authority that the business entity holds.

DRLP


The 14 Day Notice

The only DRLP of the agency loses a line of authority that the business entity holds.

The DRLP becomes inactive due to noncompliance with CE or any other reason.

The DRLP leaves the agency.

DRLP


The 14 Day Notice

The DRLP becomes inactive due to noncompliance with CE or any other reason.

The business entity no longer has a DRLP for one or more of its lines of authority.

DRLP


The 14 Day Notice

The DRLP leaves the agency.

Technology Update

Terri MannTechnology Specialist

Interfaces with NIPR

Michigan is 100% electronic in company appointments and terminations through NIPR

3/22/2010 Michigan went live with electronic Business Entity applications resident and non resident

Electronic applications for adjusters, solicitors and counselors

Electronic License renewals

Address Change Requests

10/28/2008 Michigan became 100% electronic for individual producers, resident and non-resident






Changing Your Mailing Address

After July 1, 2010, licensees may be fined up to….Incorrect mailing

address

Notify OFIR of changes within 30 days to avoid the fine.

Advances in Technology

Movement towards complete use of email communications.

Includes:

• Renewals

• Pending Application Inquiries

• CE Notices

• Other insurance related correspondence

Projected

Date:

Dec. 2011

Advances in Technology

Enterprise Web-based Database

Will be used for:

• Surplus Lines Taxes

• Renewals - Solicitors, Counselors,

Adjusters, & Surplus Lines

• CE & PE Banking for Providers

Projected

Date:

Jan. 2011

OFIR is “going green” by utilizing online licensing

notifications.

Notifications will no longer be sent on

paper.MORE

Licensees will no longer receive the following

through mail: Warning letters for C.E.

C.E. Suspension letters

Requests for additional information for licensure

Licensure notifications

Document requests

What does this mean for me?

You must contact OFIR with your current email address.

You must add OFIR’s email address to be accepted in your mailbox.

[email protected]

Navigating the OFIR Website



Afternoon Break

Main ConcourseCoffee

Decaffeinated CoffeeCookies

Entry Level Licensing Exams

Paige Colley, Testing SpecialistTadas Dabsys, Vice President – PSI Services

Dr. James Fryer, Senior Sales Executive – Pearson VUENikki Shepherd Eatchel, Vice President – PrometricCraig Johnson, Client Services Manager – Prometric

Test Development

Tadas Dabsys

Vice PresidentMarketing & Solution Management

PSI Services LLC

Regulation & Testing

• Public Protection

• Entry-level Knowledge

• Minimum Competency

• Duties & Responsibilities

• State Insurance Laws & Regulations

Licensing Exam Development

• Validity

• Reliability

• Fairness

• Legal Defensibility

• Standards

Critical Issues: Fairness

• Chapter 7 in the Standards

• Principle aspects of fairness:

1. Lack of bias2. Equitable treatment3. Equality in outcomes

Critical Issues: Fairness

Highlights of Chapters 8, 9 and 10

Chapter 8: Rights and Responsibilities of Test Takers- candidates’ rights

Chapter 9: Testing Individuals of Diverse Linguistic Backgrounds- adaptation and potential impact on validity

Chapter 10: Testing Individuals with Disabilities- ‘reasonable accommodations’

Job Analysis Survey

• Job Analysis

• Procedure - Content Development- Format Development

Sampling Methodology

• Sampling – Representative Sample

• Target Groups

• Sources for Addresses/Contact Information

Analysis of the Survey Results

• Demographic Information

• Professional Activities

• Knowledge - Rating and Respective Response Scales - Summary Statistics - Identification of Qualifying Professional Activities/Knowledge

Content Specifications

• Development of Content Specifications

• Establishing Content Base for Inclusion in Exams

• Linking Knowledge Areas to Professional Activities

• Development of Operational Definitions

• Test Outline and Content Weighting

Writing Exam Questions

Dr. James Fryer, Ed.D., CPCU

Senior Sales ExecutiveBusiness Development

Pearson VUE

Basic Item Writing Principals

• One Correct Answer

• Relevant and Appropriate

• Realistic

• Important to Related Task

• Straightforward

• Clear and Concise

• No Clues that Give Away the Answer

• Entry-Level Reading Level

Item Writing Principals

• Define the Task

• Express a Complete Thought

• Reduce the Reading Load

• Use of Negative Words

• Response Options need to:

– Fits the Stem Logic– Equal in Length– Unique Meaning– Plausible– Avoid “All the Above” and “None of the Above”

How?

• National Subject Matter Experts

– Qualifications– Experience– Background in Job Analysis

Linking to Job Analysis

• Activities and Tasks

• Subject/Content Area of the Task

• The Knowledge Statement (KSAs)

Linking to Knowledge Statement

Content Topic Area: Types of Life Policies

Content Sub-Topic Area – Term Life Policies

Job Task – Explain the special features of the policy

KSA – Knowledge of the renewable and convertible features of a term life policy

Linking to Knowledge Statement

Knowledge Statement:

The entry level practitioner must be able to explain the special features of a term life policy to a potential policyholder.

Balancing Cognitive Levels

Recall: Able to state the definition of “renewable and convertible.”

Application: Applies knowledge of the definition of “renewable and convertible” by clearly explaining what both mean and how they can be exercised by a policyholder.

Analysis: Applies knowledge of the definition by determining if the potential policyholder clearly understands the information that is being presented to him/her.

Performance Analysis

Nikki Shepherd Eatchel, M.A.Vice President

Test DevelopmentPrometric

Item Statistics

p-value: Percentage of candidates in a sample who answer an item correctly.

rpbis: Correlation within a sample between performance on an item and performance on the overall exam.

option analysis: Percentage of candidates who answer each option.

option rpbis: Correlation between performance on the options and the overall exam

Forensic Data Analysis

Suspicious Candidate Activity

Test for significant differences in pass rates

Better performance on harder items

High scores in low test times

Suspicious improvement in scores

Candidates with unusual item timing (bimodal latencies)

Previewing behavior

Analysis of Subgroup Performance

Tests for significant differences in pass rates

Differential item functioning (DIF): DIF occurs when examinees from different subgroups with equal knowledge exhibit different probabilities of success on an item. However, DIF by itself, is not evidence of item bias.

Reporting Results and Impact of Scores

Candidate Score Reports

Diagnostics

State Reports

- Monthly - Annually

School Reports

Topic Level

Candidate Performance: MI Life Producer Exam

1665 MI Life Producer Exam 1/1/09 – 12/31/09

Number of Exams Given 4,313Number of Total Examinees 2,808

Number of Total Examinees Passed 2,185

Percentage of Total Examinees Passed 77.8%

Number of First-Time Examinees 2,664Number of First-Time Examinees Passed 1,628

Percentage of First-Time Examinees Passed 61.1%

Mean Percentage Score 69.0%

Standard Deviation Percentage Score 11.2%

Passing Score v. Pass Rate

Passing Score: Cut Score or minimum score to pass

Pass Rate: How many candidates pass the test

Variables Affecting Pass Rates

• Examination

• Education

• Candidate – Study Habits, Health

• Reference Material/Study Guides

• Environment

• Others

Vendor Presentations: Conclusion

◊ Questions

◊ Comments

Thank you!

Call Center Data

Avg Avg Serv Serv %Speed Calls Talk Aban Level Level Calls

Skill Date Answered Answered Time (Sec) Calls % Calls Answered

Totals: 48 14,800 379 421 83.2% 12,311 97.2%

MIINS January-09 63 1,125 488 35 81.1% 912 97.0%

MIINS February-09 37 1,176 349 32 86.1% 1,013 97.4%

MIINS April-09 62 494 364 21 76.5% 378 95.9%

MIINS May-09 54 1,626 366 51 80.3% 1,306 97.0%

MIINS June-09 58 1,674 380 80 78.2% 1,309 95.3%

MIINS July-09 38 1,696 351 32 86.5% 1,467 97.9%

MIINS August-09 56 1,449 383 56 82.2% 1,191 95.5%

MIINS September-09 42 1,412 365 52 83.9% 1,184 95.8%

MIINS October-09 45 1,423 379 50 83.4% 1,186 95.7%

MIINS November-09 45 1,370 360 50 83.0% 1,137 96.0%

MIINS December-09 26 1,355 380 29 90.6% 1,228 97.3%

Recruitment of SME’s for ERW August 19, 2010

Craig Johnson, MPA

Client Services ManagerFinancial Services

Prometric

ERW OVERVIEW

Prometric and the Michigan Office of Financial and Insurance Regulation conducted the annual exam review workshop to:

• Review content outlines for applicability with current Michigan statutes, rules, regulations and Insurance Department policy;

• Review test items – questions and responses – for clarity and relevance;

• Draw on the expertise of local insurance professionals to further validate the test content used in the state.

• Prometric performs an exam review for all exams in Michigan every two years to cover National and State content

OVERVIEW OF EXAM REVIEW WORKSHOP

• The Michigan Office of Financial and Insurance Regulation and Prometric identified and enlisted approximately 38 Michigan industry professionals to participate in the 2009 workshop.

• Participants represented various industry affiliations, levels of experience, and geography

• This breadth of representation was sought to ensure development of exam content that tests entry-level knowledge for licensing in Michigan .

Each test item was either accepted, modified, or removed

from the item bank after it was reviewed.

ERW TIMELINE OF ACTIVITIES

The ERW is one of the first of several steps in the process to update test content and to republish Michigan Insurance exams in Prometric test center network.

The target date for next Michigan Insurance ERW is August 19, 2010

*New exam outlines available post ERW

Exam

Review

Workshop

Exam

Review

Workshop

Course

Outline

Revisions

Test

Design

Revisions

Test

Publishing

Test

Quality

Exam

Distribution

Exam Review Workshop- Content Review

Both National and Michigan - Specific Content Reviewed• Reviewed annually by Committees

Committee is chosen and invited by OFIR Industry Leaders and OFIR employees are represented Every line is thoroughly reviewed by participants ERW participants are not responsible for item writing but review and

re-write to ensure it meets OFIR standards; however, OFIR conducted item writing session in the past

EXAM CONTENT OUTLINE

Licensing Examination Bulletinhttp://www.prometric.com/Michigan/Insurance.htmClick the download button under the heading “Find Answers to Your Questions”

Outlineshttp://www.prometric.com/Michigan/content-outlines.htm

Problem Applications

Tracey PeckLicensing Specialist

Inaccurate Application Responses

Errors in CRIMINAL and ADMINISTRATIVE background questions are the most common among application responses.

Convictions must be reported, including:

CRIMINAL Misdemeanors, felonies and military offenses.

Judgment deferred

Pending charges

Guilty convictions

Offense where a fine / probation / suspension was given

Guilty plea or nolo contendre

Misdemeanor traffic offenses and juvenile delinquent acts (offense for which you were

convicted as a juvenile).

EXCEPTIONS:

If you do not disclose a conviction on your application and one is found during our

check, the failure to disclose is a reason to deny you a license!

**NOTE**



Misdemeanor traffic offenses and juvenile delinquent acts (offense for which you were

convicted as a juvenile).

EXCEPTIONS:

If you do not disclose a conviction on your application and one is found during our

check, the failure to disclose is a reason to deny you a license!

**NOTE**



Admin. action

must be reported, including:

ADMINISTRATIVE

Having a license censured / suspended / cancelled /

terminated

Being assessed a fine

Receiving a cease and desist order

Receiving a compliance or prohibition order

Surrendering a license to resolve an admin. action

Being party to an admin. action or arbitration hearing

Only exceptions are terminations due solely to noncompliance with continuing education

or failure to pay a renewal fee.

EXCEPTIONS:

Questions & Answers

OFIR Licensing Staff

Adjournment

Please complete an evaluation.

Thank you for attending the 2010 Best Practices Forum!

Documents

Best Practices in Insurance Licensing Forum. Agenda 10:00 – 10:30Welcome and Opening Comments Sonya Dungey, Director of Licensing Michele Riddering, Licensing