NAIC Fall 2010 National Meeting Preview

 

 

The National Association of Insurance Commissioners Fall National Meeting in begins today, October 18, in Orlando, Florida, and runs through Thursday, October 21.

Following is a preview of NAIC Committee, Subcommittee and Task Force activities scheduled during that time.  To access meeting information, including a hyperlink to the complete preview and final meeting agenda, click here.

Note:  To reference model law numbers (in parenthesis below), click here.

 

Should you have any questions or comments, please contact Colodny Fass.

 

Special Meetings

The NAIC’s Securities Valuation Office will provide a one-hour education session on the planned 2010 Year-End Commercial Mortgage-Backed Securities/Residential Mortgage-Backed Securities (“CMBS/RMBS”) process. The CMBS/RMBS assessment provides additional analysis of expected losses and related risk-based capital (“RBC”) requirements for the insurance industry.  The session will include a discussion of how the expansion of the examination of RMBS holdings (done in 2009 to now include CMBS holdings in 2010) will enhance the analysis for another 43 percent of structured securities owned by the insurance industry. It also will include a discussion of how the assessments will continue to distinguish and supplement the NAIC’s stringent capital requirements and those of state insurance regulators, which are based upon the expected losses and RBC for a particular company.  For additional information on CMBS/RMBS assessments, click here.

A public hearing will be held by the Title Insurance Task Force on private transfer fee covenants.  Comments generated through this hearing will be considered in determining whether the NAIC should take a position taken on these fees.  To access detailed information on the hearing, click here.

 

Committee Agendas

In its scheduled joint meeting, the NAIC Executive Committee and Plenary is expected to adopt the following:

• Amendments to the Insurance Holding Company System Regulatory Act (#440) and the Insurance Holding Company System Model Regulation with Reporting Forms and Instructions (#450)
• Amendments to Actuarial Guideline XXV – Calculation of Minimum Reserves and Minimum Nonforfeiture Values for Policies with Guaranteed Increasing Death Benefits Based on an Index
• Amendments to Actuarial Guideline XXXVIII – The Application of the Valuation of Life Insurance Policies Model Regulation
• Deletion of the Twenty-Four Hour Coverage Pilot Project Model Act (#960)
• A new bulletin on Gramm-Leach-Bliley Act Privacy Notices

The election of 2011 NAIC officer elections also will be conducted during this meeting.

Three model law development requests will be presented to the Executive Committee for approval:

• Amendments to the Model Risk Retention Act (#705)
• Amendments to the Credit for Reinsurance Model Law (#785)
• Amendments to the Credit for Reinsurance Model Regulation (#786).

Joe Ferreira of the Massachusetts Institute of Technology will present his findings on the link between miles driven and loss claims to the Climate Change and Global Warming Task Force.  Outstanding issues related to the Climate Risk Disclosure Survey also will be discussed.

The Market Regulation Accreditation Task Force will discuss a revised draft of the Market Regulation Accreditation program, as well as deliberate the purpose and objectives of market regulatory accreditation.

The Producer Licensing Task Force will consider the adoption of the National Association of Registered Agents and Brokers Working Group’s report on states’ continued compliance with the licensing reciprocity mandates of the Gramm-Leach-Bliley Act.  A progress report will also be given on developing a limited line that 1) encompasses several insurance products for which the business of insurance is ancillary to the business of the person offering the product; 2) includes licensing requirements of individuals selling limited line insurance products; and 3) integrates fingerprinting of individuals selling limited line insurance products.   Another progress report will be given on a current project to simplify and create greater uniformity in the business entity licensing process, as well as for reviewing the process for producer examination development, including uniform standards of delivery, updating exams and improving the overall examination passage rate.

The Solvency Modernization Initiative Task Force will discuss the progress of the International Association of Insurance Supervisors (“IAIS”) Common Framework for the Supervision of Internationally Active Insurance Groups (also known as the IAIS ComFrame) and the Solvency Modernization Initiative.  The objective is to provide approaches to better monitor group structures, group business mix and intra-group transactions, with a view to identifying risks and establishing safeguards where necessary; set out quantitative and qualitative requirements; as well as provide a platform for supervisory cooperation and interaction, while facilitating wide implementation.  Further, the Group Solvency Issues Working Group will review a draft of Holding Company Best Practices and continue a discussion on group-wide capital considerations.

The Information Systems Task Force will hear progress reports on approved 2010 NAIC technology initiatives currently in progress: 1) Complaints Handling and Reporting Standards; 2) Market Conduct Annual Statement 2010; and 3) Financial Electronic Examination Tracking System.

Life Insurance and Annuities Committee members will consider a stranger-originated annuity transactions insurer alert for adoption.   The Annuity Disclosure Working Group will continue discussion on revisions to the Annuity Disclosure Model Regulation (#245), with the focus on adding guidelines on the use of illustrations in the sale and solicitation of fixed annuities. Members anticipate finalizing revisions of the proposed new annuity buyer’s guides for fixed deferred, fixed indexed and variable product types.

Property and Casualty Insurance Committee members will hear a report from the September 30 public hearing on Proposed Risk Classification Data Call and Other Risk Classification and discuss the development of a data call for personal auto insurance related to insurers’ use of risk classifications, including credit-based insurance scores.  They will also discuss a request for Executive Committee approval to develop a model law that would regulate vendors who provide insurance scoring information.

The Surplus Lines Task Force will review recent activities of its Multi-State Surplus Lines Premium Tax Working Group, as well as consider methods to implement the requirements of the Nonadmitted and Reinsurance Reform Act.

The Title Insurance Task Force will receive reports from its Annual Statement Instructions Subgroup, which is expected to give recommendations on improving the title annual statement and filing instructions.  These would include crosschecks for title filing data. If the Subgroup’s recommendations are approved, drafting would begin on finalizing a proposal to be formally submitted to the Blanks Working Group for consideration. The Title Statistical Plan Working Group will present an agent statistical plan recommendation to the Task Force, in which is suggested that the collection of various data elements could be useful in market analysis and market regulation, thereby assisting state insurance regulators in analyzing the insurance marketplace. The Task Force will hear an update from the National Conference of Commissioners on Uniform State Laws regarding their consideration of a model law on mortgage subrogation, and may consider the establishment of a working group to monitor mortgage fraud.

The Workers’ Compensation Task Force plans to receive an update on H.R. 635, the proposed federal bill to establish a National Commission on State Workers’ Compensation Laws. Its NAIC/ International Association of Industrial Accident  Boards and Commissions Joint  Working Group will discuss the draft NCOIL Transportation Issues Model Act and concerns with workers’ compensation enforcement related to out-of-state employers.

The Market Regulation and Consumer Affairs Committee’s Consumer Connections Working Group will hold an open dialogue with regulators, state consumer service representatives, consumer groups and industry member on current marketplace issues and consumer advocacy efforts.  Topics could include a discussion on health care reform implementation and its impact on consumers; implementation efforts on the PPACA Consumer Assistance Ombudsman Grants; or updates on consumer awareness of stranger-owned life insurance. The Consumer Disclosures Working Group will discuss implementation of a model bulletin regarding states granting a safe harbor of compliance with state privacy notice requirements, with insurers using the new Federal Model Privacy Form and uniform disclosures. The Market Analysis Procedures Working Group will discuss best practices for the national analysis of Market Conduct Annual Statement data, the qualifications of market analysts, and revisions to the market analysis chapters of the Market Regulation Handbook.

The newly formed Retained Asset Accounts (“RAA”) Working Group will discuss the results gathered from its recent company survey, which obtained sample disclosure forms, claims forms, insurance policy language and supplemental contracts used for life insurance policies.  It will also provide final recommendations to its parent committees, which will include five options: 1) clarify ability of companies to provide consumers with information regarding RAA coverage under guaranty fund laws; 2) develop a policy statement on clear disclosure if an insurance company uses RAAs; 3) develop a Uniform Disclosure Form for the use of RAAs that includes disclosure of the presence of guaranty fund coverage and the absence of Federal Deposit Insurance Corporation (“FDIC”) coverage, unless the insurer deposits RAA proceeds in an FDIC-insured bank; 4) increase limits of guaranty fund coverage on RAAs, particularly when a solvent insurer issues an RAA and subsequently becomes insolvent so that the beneficiary receives 100 percent of the value of the RAA and credited interest; and 5) update the NAIC Retained Asset Account Bulletin to reflect established policy direction.

The Financial Condition Committee’s Examination Oversight Task Force will review enhancements to the risk-focused surveillance guidance for both financial analysis and financial examinations. An update will also be provided on states’ adoption of the recently revised Hazardous Financial Condition Model Regulation (#385).

The Reinsurance Task Force will consider recommendations regarding key elements of the Reinsurance Regulatory Modernization Framework for accreditation purposes.  Updates will be received on legislative work related to reinsurance and the IAIS Subcommittee on Reinsurance and Other Forms of Risk Transfer.

The Risk Retention Group Task Force review other committees’ work on risk retention groups (“RRGs”) incorporated as captives, as well as  discuss feedback received on limited scope examinations for certain RRGs.

The Financial Regulations Standards and Accreditation Committee will consider adoption of the following:

• Revisions to the Use of Specialists – Computer Audit Expertise Guidelines were proposed based on the new information technology review approach included in the Financial Condition Examiners Handbook.
• New Part A: Laws and Regulation standards will be required for RRGs as of January 1, 2011; however, a few models were revised after the Risk Retention Group Task Force finished its initial deliberations on Part A. These are the items the Committee will be considering for adoption-specifically, the Property/Casualty Actuarial Opinion Modal Law (#745) and revisions to the Annual Financial Reporting Model Regulation (#205) will be discussed.
• Revisions to Guideline 2 in Appropriate Depth of Review Standard include adding the Actuarial Opinion Summary to the list of filings the analyst should review and also includes updating the names of the NAIC Financial Analyst Solvency Tools.
• Revisions to the Scheduling of Examinations Standard indicate that all multi-state examinations should be called through the NAIC Examination Tracking System.
• Revisions that update accreditation guidance for certain items noted as a result of a survey of the chief financial regulators.  In addition, they update the Review Team Guidelines for examinations performed under the risk-focused surveillance approach.
• Revisions on Holding Company Analysis, which relate to two accreditation standards within the financial analysis section.