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Financial Literacy - Insurance
Sandy Praeger
If you have questions about insurance, contact your state insurance department.
Understanding insurance needs

Interview: Sandy Praeger

We all love to hate insurance. It's easy to loathe paying the premiums, rant about coverage limitations and gnash your teeth at rate hikes.

Sandy Praeger polices the activity of insurance companies and agents in her state, as the Kansas Insurance Commissioner and National Association of Insurance Commissioners, or NAIC, president-elect. An authority on fair and unfair insurance practices, she shares her thoughts on hot button-issues such as Comprehensive Loss Underwriting Exchange, or CLUE, reports used to figure out your risk profile and the use of insurance scoring to make pricing decisions, contending that there is a positive side to the insurance industry, after all.

At a glance

But first: What is the NAIC?
For the benefit of people who have never heard of the National Association of Insurance Commissioners, what is it that your organization does?

We are an association of all of the insurance regulators in the U.S. and its territories. We have been in existence since 1871. It's the oldest association of state entities. Our primary goal is to work together to improve insurance regulation in our states. It's important we do that because insurance is regulated at the state level. However, many of the companies we regulate are in all of our markets, so having consistency in regulation makes the regulation more effective.

It also eliminates the unnecessary bureaucracy that can add to cost, which is a prime issue that consumers are concerned about. If we see changes in the marketplace that we feel are saying we need to be changing our state laws, we assign that to a committee with the NAIC. We develop models that states can then use as guidelines to adopt legislation back in their individual states. That works as a very effective way to promote uniformity as much as possible.

The market changes usually are across the board; sometimes they're more regional. For example, what the Southeast is dealing with after all of the hurricanes, they have market conditions there that are different than perhaps market conditions I have in Kansas -- although not so much this year with all the tornadoes and floods that we've had.

The ability to work together to address the changing environment and make sure our regulations are appropriate do two things really: promote a competitive marketplace -- a good competitive marketplace is good for consumers -- and provide that interaction with consumers to make sure that when they buy an insurance product, the promise to pay that's inherent in that product is upheld.

-- Posted: Aug. 20, 2007
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