There is a greater push for transparency, both in terms of financial reporting and in regard to regulatory actions, but I wonder how successful this push will ultimately be. It is the regulatory bodies that will have to be the driving force, along with institutional investors. A recent action indicated to me that one particular regulatory body seems to have little concern for transparency. It was reported at www.indystar.com/apps/pbcs.dll/article?AID=/20070405/BUSINESS/704050480 that Conseco Life Insurance Co. has been fined $750,000 by Iowa regulators. The article reports that state kept secret exactly what triggered the penalty. This got me curious, as the fine was described as ”one of the Iowa Insurance Division's largest such penalties,” so I tracked down the order.
It read as follows:
“C. The Division and Conseco Life agree that this MOU [Memorandum of Understanding], and related Consent Order, constitute a full and complete settlement and release of all matters regarding or relating in any way to Conseco Life’s use of an ‘R-Factor’ in Lifestyle and Lifetime insurance policies and to any and all claims by or on behalf of the Division against Conseco Life, its affiliates, successor and assigns, with respect to matters addressed and resolved in this Consent Order and the MOU.“D. Within fourteen (14) days of the date of this Order, Conseco Life shall pay a civil penalty in the amount of $725,000 and costs in the amount of $25,000.”
The related Consent to Order indicates that Conesco, while expressly denying any violation, consent to the Order and Memorandum of understanding, and agreed to be bound by it.I have read many orders from regulatory bodies, and most of the orders or accompanying releases give the detailed allegations made by the regulatory body. Not here! You have no idea what is an “R_Factor” is, and why its use by Conseco might be improper.
I guess the Iowa Insurance Division sees no benefit in transparency and assumes other insurance companies now know when and how to use the “R_Factor” properly, and that any aggrieved insureds fully understand if they should go forward with any financial reparation claims against Conseco.
I understand why Conseco might not want fuller disclosure, but I would have liked it if the Iowa Insurance Division had explained why it favored so little transparency in what was described as ”one of the Iowa Insurance Division's largest such penalties.”
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