Audit gives Utah Insurance Department favorable review

The state department that regulates the Utah insurance industry received a generally favorable review in an audit of its operations released Monday by the Office of the Legislative Auditor General.

The audit, however, suggested several areas where the Utah Insurance Department (UID) needs to improve. Two of those areas centered around shortcomings in the way the department communicates with those it regulates.

"We thought the audit was fair and gave an accurate assessment of where we can improve," said Utah Insurance Commissioner Todd Kiser. "And we will be moving forward and implementing the recommendations."

The department, which operates with an annual budget of more than $8 million, administers and enforces licensing laws for more than 103,000 agents, brokerages and insurance companies. Its goal, in large part, is to protect Utah's residents by assessing the financial strength of insurers to make sure their assets are sufficient to pay claims.

Legislative auditors, as part of their examination, conducted two surveys of insurance agents to better gauge their opinions of the department and its Market Conduct Division, which serves as the department's enforcement arm investigating violations of the state's rules and regulations.

"Agents responded favorably to a variety of survey questions regarding [the] UID" and gave favorable ratings for all six areas of the department operations surveyed, including processing of initial license applications, online license renewals and department administration.

Still, the survey found that 25 percent of the agents surveyed didn't feel the department provides easy access to information about state insurance law and rule changes.

Also, many of those who were investigated by the Market Conduct Division during the past three years "responded less favorably" to a variety of questions regarding that division.

"We anticipated an unfavorable bias toward the division due to its role in administrative enforcement, however, the survey responses raise concerns about explanations of the investigative process provided by market conduct examiners," the audit stated, indicating that about one-third of the survey participants gave a "Poor" rating for the way state insurance examiners explained the investigation process.

"[The] UID does not have a policy to guide this process and explanation of the process is left to the discretion of the investigator. We believe better communication during investigations would improve department-licensee relationships and improve perceptions of the department," it said.

To that end, auditors recommend that the department review the effectiveness of its communications methods for informing those its regulates about law and rule changes. It also recommended that the Market Conduct Division standardize examiner explanations of the investigation process with "clear policy and examiner training."