In accordance with the State Appropriation Act, agencies appropriated funds in the Act must report on their website by September 1 of each year a self assessment of the agency’s use of the following best practices during the prior fiscal year. For each of the best practices, the agency must publicly rate itself as In Compliance, In Progress, or In Non-Compliance.
The Department of Insurance’s self assessment and the use of the 13 Best Management Practices is below. The Department considers itself in compliance with all items.
13 Best Management Practices
Status: In-Compliance
The Department has developed a meaningful and useful Strategic Plan that focuses on the following goals:
- To continue to provide for the continuity of the Department by updating and implementing the objectives outlined in the Department's Strategic Plan, including the development of succession plans, workforce plans and training plans. The Department's overall budget will be aligned with its strategic goals and objectives.
- Develop recommendations for stabilizing the Department's funding so that it can continue to provide critical regulatory services.
- To make recommendations to the Governor and the South Carolina General Assembly on legislative changes required to stabilize the availability of certain types of insurance and to enhance the regulation of insurance in South Carolina.
- To maintain and enhance the Department of Financial Services' compliance with regulatory accreditation standards established by the National Association of Insurance Commissioners (NAIC). In addition, the Department will increase by 10% the number of insurers using the State Electronic Rates and Forms Filing (SERFF) system (endorsed and supported by the NAIC) for electronically processing rates and forms filings received by the Department.
- To enhance the Department's regulation of the Alternative Risk Transfer Services (ARTS) market in South Carolina and promote its continued development.
- Conduct education and outreach campaigns to key stakeholders
Each division of the Department continues to develop new goals on an ongoing basis to promote continuous improvement. The Director requires ongoing status reports of our Strategic Plan, ensuring that our broad goals, along with specific objectives for each division, are being met.
The Department conducted an internal review to pull together a budget designed to accommodate the priorities and goals of the agency. The Department has prepared departmental budgets with information on current services to lay the groundwork for budget expenditures. The department has also gathered information to develop estimates of future spending on current services. With that information, the department can build its budget proposals based on the needs of the agency.
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Status: In-Compliance
The Department has incorporated the findings from prior performance review into the policies and procedures developed or under development by the program areas. For example, a previous internal performance audit indicated that we could improve our rate review process. Timely, consistent and high-quality performance is particularly important in the Rates and Forms area, as there are statutory deadlines for reviewing filings. Moreover, delays by the Department prevent insurers from taking and/or releasing new products to consumers. As a result of this review, rate and form processes have been clearly defined, objective performance standards established for each process, and supervisors now closely monitor and manage employee performance on a regular basis. The changes have resulted in an orderly flow of correspondence received in and outside the area. In addition, collaborative efforts between the Department’s Central Files section and the Rates and Forms section continue to provide a much more organized system.
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Status: In-Compliance
The Department works with a number of suppliers and vendors. The following is a listing of the businesses and organizations with whom we conduct business on a regular basis: State Budget and Control Board, CIO’s Office (for technology infrastructure) and Office of Human Resources; South Carolina Department of Corrections, Industries Division; Gateway Company; SLED; Parkway Properties; Beeline; Bank of America; King and Queen Company; City of Columbia Parking Services; Sowell Gray Stepp & Lafitte; John O’Neal, Esquire; Advantage Courier; Carolina Office Systems; E Crane Computing; Hartsville Toner Recharge; Verisign; Federal Express Corporation; Actuarial Group Inc.; G&H Mail Service; AT&T; Johnson Lambert & Company; Spirit Telecom; Milliman & Robertson, Inc.; University of South Carolina; Lewis & Ellis, Inc.; Bartlett Actuarial Group; Mercer Oliver Wyman; Financial Risk Analysts; Cavins Business Products Inc.; Verizon Wireless; South Carolina Department of Revenue & Taxation; Merlinos & Associates, Inc.; West Group; Claire Thinking, Inc.; Russell-Massey and Company; Society of Financial Examiners; Oracle Corporation; T Crown Industries; Training Concepts; J.M. Grace Corporation; Minolta Corporation; General Services Print Shop; Dell Computer Corporation; Thomson Prometric; and Prestige Travel Services.
Each state Department of Insurance has a unique opportunity to partner with national organizations which provide assistance to the public. The National Association of Insurance Commissioners (NAIC), based in Kansas City, Missouri, is an association of state and US territory insurance commissioners designed to promote uniform and consistent insurance regulatory practices throughout the country. The National Insurance Producer Registry (NIPR), a subsidiary of the NAIC, provides electronic processing of non-resident producer licenses. The National Council of Compensation Insurance (NCCI) serves as the statistical agent for workers’ compensation insurance in South Carolina, and acts as administrator of the state’s Assigned Risk Plan.
Hurricane Damage Mitigation Program provided matching grants of up to $5,000
to assist individuals in making their homes as hurricane-resistant as possible. The Department partnered with local and statewide businesses and not-for-profit agencies to provide information and mitigation methods to help South Carolinians learn ways to make their homes more hurricane-resistant. During the fiscal year ending in June 30, 2008, the Hurricane Mitigation program made 523 grant awards resulting in 478 grant payments totaling $2,261,768.
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Status: In-Compliance
The Department is charged with insuring the solvency of captive and traditional insurance companies domiciled in South Carolina through comprehensive regulatory oversight and examination. To assist in this charge, the Department outsources a portion of these. Comprehensive financial examinations of the financial condition of domestic captives and traditional companies are performed using the standards established by the National Association of Insurance Commissioners’ (NAIC) Financial Condition Examiners Handbook.
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Status: In-Compliance
The Department has reviewed and updated its workflow and production processes, and has developed objective performance measures for each activity. The Department implemented a universal review date of July 1 for the Employee Performance Management System, which is used to develop performance plans for employees as they relate to key services and functions. The EPMS communicates management’s expectations for each employee and informs the employee of the specific performance measures that will be used to evaluate his or her job performance. For the second year, the agency met its goal of 100% by providing a completed EPMS review on each employee. Our philosophy statement, LIRAC (leadership, integrity, responsiveness, accountability, and customer service) is the foundation of all employee performance; unethical job performance is not acceptable. The Department continues to revise, update and expand its policies and procedures manual.
By coupling the Employee Evaluation Assessment (EEA) form with the EPMS, we created a two-way communication tool in which managers and employees collaborate to identify and find solutions to issues, problems and inefficiencies in the Department’s processes that compromise the Department’s ability to accomplish its mission. To further empower employees and ensure that they have the technical and other skills necessary to effectively perform their jobs, the Department utilizes numerous state and industry resources to provide training and professional development for employees. Employees attending these various programs, workshops, conferences and seminars share what they have learned with other employees through in-house training programs.
Working with the University of South Carolina’s Government Research and Services Division, the Department conducted process reviews throughout the agency, including Market Services, Special Licensing, Rates and Forms, and Consumer Services, to identify ways to more efficiently deliver services to South Carolina consumers and companies conducting business in the state. Improved efficiency has been achieved in each of these sections.
In the past, when an application for licensing of an individual was received, the Department had to request a copy of a criminal history report from the State Law Enforcement Division (SLED). Applicants now send a copy of their SLED report with their application, reducing the time to approve a license by at least three weeks.
Special Licensing renewals had previously been done on an annual basis. A simple change to biennial renewals will result in a projected savings of $700 annually in postage alone. Staff time previously given to a yearly renewal will save one to two weeks annually for each license renewal.
The Department’s Market Services area is receiving electronic filings via the System for Electronic Rate and Form Filing (SERFF) network and filings still submitted by paper are now fully accounted for. New procedures were implemented to process rate and form filings with deadlines established for each filing type.
Special Licensing and Individual Licensing areas have incorporated audit standards to confirm that licenses are consistently meeting success standards on a daily basis.
The Consumer Services Division handled 2,644 written complaints, 61,095 telephone calls/inquiries, and 151 walk-in visitors. Additionally, approximately 100 legislative/constituent request for assistance were handles. Previously, only written complaints were being recorded and tracked. The Department now captures information regarding telephone inquiries and complaints that will enable the Department to better monitor insurer behavior in the marketplace and to determine whether a market conduct examination is warranted.
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Status: In-Compliance
The Department actively seeks to improve efficiency through technology. To meet
this objective the Department has done the following:
- Manage record storage using data imaging technology
- Increase electronic commerce (EFT, Credit Card)
- Create an electronic system for the Captives area
- Automate application and renewal process, premium tax collection and enterprise (state-based) system
- Upgrade Groupwise
While the Department’s mission does not change, the range of activities necessary to achieving that mission are changing and growing. Leveraging new technology with organizational knowledge has been and will continue to be critical to the ongoing success of the Department and our ability to perform those wide-ranging activities. The Department’s website has proven both efficient and effective for dealing with many of our customers. Additionally, insurers may now make certain rate and form filings electronically. Since many process reviews have been completed, we have identified and implemented numerous opportunities to make our process design and delivery more efficient and effective.
Because paper is an extremely costly means of communicating ideas and storing information, the Department realized that it needs to image all available data. The agency has started to implement a centralized Electronic Document Management System that will enable electronic document storage, retrieval, and workflow management, to achieve cost savings and improve traditional ways of doing business. Through the course of a year, hundreds of thousands of pages of documents and correspondence are generated and received. Filing is naturally time-consuming and prone to error, even in the best of manual file systems. Documents can be misfiled, misplaced, lost, damaged, and/or unavailable. This contributes to increased retrieval time, incomplete information, and frustration. Additionally, because individual divisions often need to share documents, the need to centralize the storage of original documents and make them available through secured electronic means becomes even more critical.
Electronic document management systems provide a process through which a document is recorded or scanned electronically, indexed, and stored as a digital image of its original form. Once digitized, it can be routed, archived, and/or retrieved automatically. In addition, imaging the Department’s data has become a replacement for traditional manual filing techniques. Through the "document storage and retrieval" process, documents are captured by scanning, then indexed and archived for retrieval at a later date. This reduces file space, eliminates errors and misfiling, and improves productivity.
Using an electronic document management system, many areas have achieved significant improvements in the ability to provide efficient business service. Primary among these benefits is the ability to provide immediate response to customer inquiries or to retrieve relevant documentation while directly assisting the customer. This directly enhances efforts to improve overall customer satisfaction. The time delays traditionally associated with document retrievals are virtually eliminated or, at least, significantly reduced.
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Status: In-Compliance
The Department has been using the electronic document management system which encourages the conservation of paper supplies, saving both space and money. Employees are encouraged to use electronic catalogs in place of printed ones, send invoices, statements, requests for quotes, quotes and other documents by email or fax.
Employees are encouraged to make a habit of turning off the lights when leaving any room for 15 minutes or more and to utilize natural light whenever possible. Employees are also reminded to turn their computer off at the end of each day and be conservative with using the thermometer in order to conserve resources and energy.
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Status: In-Compliance
The Department leases its office space therefore this information is not applicable.
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Status: In-Compliance
The Department conducted an internal review to pull together a budget designed for priorities and goals for the agency. The Department has prepared departmental budgets with information on current services to lay the groundwork for budget expenditures. The department has also gathered information to develop estimates of future spending on current services. With that information, the department can build its budget proposals based on the needs of the agency.
The Department has made a proposal to move toward a more dedicated funding system. The fund is created out of the fees and assessments, fines and penalties, taxes, and other incomes generated by the Department while most taxes which includes premium and retaliatory taxes go into the state’s general fund. With dedicated fund system the Department spends from the dedicated fund up to a level appropriated by the legislature. Should incoming revenue exceed the Department’s expenditures; the balance is carried forward to the next fiscal year. However, if the dedicated revenue is less than anticipated appropriated amount, the Department must reduce spending or use the carried forward funds from the previous year(s). In an effort to boost revenue funding, the Department requested a change in the funding of the Captives program. This change was passed by the General Assembly allowing the Department to retain 20% of tax revenues for operations instead of 10% as contained in the original legislation. The Captives industry has grown substantially over the last decade and Charleston has become the domicile location of choice for domestics Captives.
An Agency dedicated funding process would allow the Department to lessen the effect of cyclical revenue changes in funding over time. The Department would also be better able to retain a cash balance during positive revenue periods and maintain consistent agency operations during economic distress. According to the NAIC 29 State insurance departments are fund using the dedicated funding method.
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Status: In-Compliance
DOI pays close attention to all issues of internal control and findings as identified by external auditors. DOI works closely with audit staff in an effort to understand concerns and identify procedures to eliminate future findings. The most recently issued report for the State Auditor was for the year ended June 30, 2007. This report contained minor violations in relation to State law. All findings have been addressed by management.
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Status: In-Compliance
The Department passed its fifth five-year accreditation review conducted by the NAIC in May, 2006. Because the review focused on the Department’s Financial Examination and Financial Analysis sections, valuable feedback on ways to improve the Department’s examinations and analysis processes and procedures was provided. The Department was re-accredited, with both areas receiving superior scores, demonstrating our commitment to excellence. The feedback and recommendations have been implemented. In addition, the Financial Services section is in constant communication with the private sector and receives constant feedback from the insurance companies it regulates.
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Status: N/A
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Status: In-Compliance
The Department is located in an in-town facility that offers a safe, secure and healthy work environment. Employees are provided with a manual of safety policies and procedures and ongoing training is held for employees with respect to general office safety and security and specific staff actions that are necessary in the event of an emergency.
The Department has defined and documented the requirements to successfully run the department during a disaster, with a Disaster Recovery Plan in place. The agency standard will be to review, update and test the plan at least once each year, including requiring tests where functional units must discuss what to do in the event of a specified disaster. A standard for recovery of data for each system is a priority. The agency goal is to have data available 99.9% of the time and the vital business systems available at 99.9%.
The IRM team has researched an improved business continuity plan. Improvements are updated continuously. This includes improved communications (TV news reporting), improved power supply to critical systems (generator), and hardware redundancy (network virtualization). Data is backed up on all servers nightly. This includes documents, spreadsheets, e-mail and other data types. The system data (Oracle Database) is backed up twice a day. Daily backup tapes are stored in a fire-proof safe onsite. Weekly backups are stored offsite in a fire-proof safe. If we need to recover and have building access, we can restore from the previous day. If we need to recover and do not have building access, we can recover data from the previous week. This is minimal coverage.
The IRM team was committed to improving our Disaster Recovery plan. This included establishing a warm site at either BlueCross BlueShield of South Carolina or the State’s CIO office. Data will be updated to the warm sites daily. This will protect the operations of the systems should the current server room fail during a disaster. Minimal systems required to operate will only be provided at the site. Moreover, additional and more comprehensive onsite backups will also be performed. This will include snapshots of key data, system configurations and application code throughout the day. This will allow recovery of data, system configurations, and all applications due to an unnatural disaster (i.e., theft, viruses, and internal threats).
In addition to ensuring the safety of our employees and providing emergency data backup, the Department is committed to assisting with the insurance needs of our residents during a natural disaster. When warranted by the Director, specially trained volunteers are deployed to the disaster location and stationed, as a general rule, in the State/FEMA-designated Disaster Field Office, working directly with disaster victims in expediting insurance claims. A Disaster Response Coordination Plan, which provides procedures to ensure a well-coordinated response to any natural disaster that may affect the Department and the citizens of our state, has recently been revised and is maintained at the Department to be used as necessary.
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