Insurers look warily at NAIC's cross-border market-conduct plan. (Briefing: NAIC Fall National Meeting).

State insurance regulators are starting a pilot program to focus on problem companies, but insurers are concerned the findings could be used by lawyers shopping for class-action lawsuit material.

The "Market Conduct Annual Statement" will be used as a uniform way to collect data about claims, nonrenewals, cancellations and complaints. Using common data gives regulators a consistent way to compare companies' performance within their states and in other states.

The result should make for more efficient use of insurance department funds by reducing the number of duplicate exams. If a company's performance is out of sync with the rest of the industry, that would trigger further review by state regulators.

While the industry can support a more targeted and less repetitive and costly program to monitor market conduct, the program "should not be a tool for class-action lawyers to prioritize which companies they want to sues said Lenore Marema, vice president of legal and regulatory affairs with the Alliance of American Insurers.

The pilot program, unveiled during the Fall National Meeting of the National Association of Insurance Commissioners in New Orleans, will begin in 10 states-Arizona, California, Illinois, Maryland, Missouri, Nebraska, Ohio, Oregon, Pennsylvania and Wisconsin.

Regulators expect to answer several market-conduct related questions, such as which companies take the longest to pay claims and what companies might be changing heir personal-lines auto and homeowners underwriting, and for what reasons.

For life companies, regulars expect to learn which have indications of potential "churning" or unusual replacement activity in the individual life and annuity business; what companies take the longest to pay death claims, and what companies have the highest rate of contested claims.