NAIC 2011 Summer National Meeting Preview

 

The National Association of Insurance Commissioners (“NAIC”) will hold its 2011 Summer National Meeting from August 29 through September 1 in Philadelphia, Pennsylvania. 

During that time, the NAIC’s various committees and task forces will review preliminary 2012 charges and will receive input on them.  These charges will be adopted by the committees and task forces at the 2011 Fall National Meeting.

Various agenda previews are listed below. 

To view the entire Summer National Meeting preview, as well as scheduled meeting dates, times and other information, click here.

 

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

 

SPECIAL MEETINGS OR EVENTS

State Legislator Orientation

While legislators are invited to attend the entire National Meeting, the NAIC will hold a special orientation session on August 28 that is specifically designed for state legislators.  During the session, NAIC members will provide an overview of the NAIC-including the committee structure, charges and model law process, products and services-as well as information about the National Insurance Producer Registry and Interstate Insurance Product Regulation Commission.

Workers’ Compensation Market Panel

The Workers’ Compensation Task Force will host an educational workers’ compensation panel presentation on August 29 consisting of workers’ compensation industry experts, along with staff from the National Council on Compensation Insurance and the NAIC to discuss the current state of the workers’ compensation market.

 

JOINT EXECUTIVE COMMITTEE/PLENARY

Among other items, the Joint Executive Committee and Plenary will consider adoption of the Insurer Bulletin on Stranger-Originated Annuity Transactions, “A Consumer’s Guide to Earthquake Insurance” and the “Registration and Regulation of Third-Party Administrators:  An NAIC Guideline.”

Progress reports will be provided on the states’ implementation efforts on adopted NAIC model laws, regulations or amendments, among which include:

• Suitability in Annuity Transactions Model Regulation (#275)
• Model Regulation Permitting the Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities (#815)
• Actuarial Opinion and Memorandum Regulation (#822)
• Valuation of Life Insurance Policies Model Regulation (#830)
• Medical Professional Liability Closed Claim Reporting Model Law (#77)
• Derivative Instruments Model Regulation (#282)
• Risk-Based Capital (“RBC”) for Health Organizations Model Act (#315)
• Model Regulation to Define Standards and Commissioner’s Authority for Companies Deemed to be in Hazardous Financial Condition (#385)
• Property and Casualty Insurance Guaranty Association Model Act (#540)
• Insurance Holding Company System Regulatory Act (#440)
• Insurance Holding Company System Model Regulation with Reporting Forms and Instructions (#450)

At this time, there are no NAIC model laws under development that are expected to come before the membership for consideration during the Summer National Meeting.

 

EXECUTIVE COMMITTEE

The Executive Committee will consider a request to amend the Long-Term Care Insurance Model Act (#640) and Long-Term Care Insurance Model Regulation (#641).

• The Producer Licensing Task Force will discuss ways to simplify and create greater uniformity within the business entity licensing process, as well as review the producer licensing recommendation contained in the 2010 U.S. Financial Sector Assessment Program. The process for producer examination development will also be considered.
• The National Association of Registered Agents and Brokers (“NARAB”) Working Group will report on states’ continued compliance with the licensing reciprocity mandates of the Gramm-Leach-Bliley Act.
• The Solvency Modernization Initiative Task Force will adopt comments to be submitted to the International Association of Insurance Supervisors (“IAIS”) on its Common Framework for the Supervision of Internationally Active Insurance Groups.
• The Corporate Governance Working Group is expected to continue discussions on existing corporate governance requirements in place in the U.S., as well as a draft White Paper on High-Level Corporate Governance Principles.
• The Group Solvency Issues Working Group will review its updates of a draft work product on holding company best practices and continue discussions on the draft NAIC U.S. Own Risk and Solvency Assessment (“ORSA”) Guidance Manual.
• The Surplus Lines Implementation Task Force is not expected to meet during the Summer National Meeting. During interim conference calls following the NAIC’s Spring National Meeting, the Task Force adopted a model bulletin on state implementation of the surplus lines provisions of the federal Nonadmitted and Reinsurance Reform Act (“NRRA”) and completed work on a model plan of operation for the NRRA clearinghouse to be utilized in conjunction with the Nonadmitted Insurance Multi-State Agreement (“NIMA”).

 

LIFE INSURANCE AND ANNUITIES COMMITTEE

Among other agenda items, the Life Insurance and Annuities Committee members are expected to continue their discussion of corporate-owned life insurance, insurable interest and IRS section 1035 exchanges.

• The Life Actuarial Task Force will continue work on the valuation manual referenced in the NAIC Standard Valuation Model Law (#820). A progress report on the impact study of the proposed principle-based reserving standards for life insurance will be given.  Adoption of modifications to the Standard Nonforfeiture Law for Life Insurance (#808) to reflect the changes being made for principle-based reserving will be considered, along with discussion of new valuation mortality tables for immediate annuities and simplified issue life insurance, the proper use of separate accounts, and the future framework for nonforfeiture provisions for life insurance and annuities.

 

HEALTH INSURANCE AND MANAGED CARE COMMITTEE

• The Health Insurance and Managed Care Committee and the Market Regulation and Consumers Affairs Committee’s Joint Limited Medical Benefit Plans Working Group plans to review existing NAIC models to determine whether additional clarification of the definition of limited medical benefit plans is necessary.  Members also will discuss concerns associated with these plans and unauthorized entities.
• The Health Actuarial Task Force will discuss long-term care insurance pricing and valuation issues, the Medicare Supplement refund formula and the development of a new valuation table for long-term disability insurance.

 

PROPERTY AND CASUALTY INSURANCE COMMITTEE

The Property and Casualty Insurance Committee will continue discussions on a regulatory framework for credit scoring information vendors model law.  Members also will listen to a presentation on less well known credit scoring information vendors.  The Committee will discuss National Florida Insurance Program reauthorization efforts, which include the possibility of privatizing the delivery of flood insurance.  The status of the personal auto risk classification survey and how pressure from rating agencies is impacting the capitalization and pricing of property insurance products will be discussed.

• The Crop Insurance Working Group will discuss federal preemption for adjuster licensing and potential updates to the Crop Insurance Handbook.
• The Earthquake Study Group will hear a presentation on the Insurance Services Office Building Code Effectiveness Grading Schedule.
• The Risk Retention Working Group will discuss status of changes to the Model Risk Retention Act (#705) concerning the addition of corporate governance standards. It also will receive updates on progress made toward updating the Risk Retention and Purchasing Group Handbook and a referral from the Risk Retention Group Task Force concerning the draft statement of voluntary dissolution Form 16b for risk retention groups.
• The Transparency and Readability of Consumer Information Working Group will discuss best practices for the design and implementation of Web-based consumer premium comparison guides for personal auto and homeowners insurance.
• The Casualty Actuarial and Statistical Task Force will receive an update from the Statement of Actuarial Opinion Subgroup, which has been working on changes to be incorporated into the 2011 and 2012 Actuarial Opinion Instructions and Actuarial Opinion Summary to be considered for adoption.  Additionally, the Subgroup has been working on the 2011 Regulatory Guidance on Property and Casualty Statutory Statement of Actuarial Opinion.  The Task Force also will receive a report from the Risk-Focused Exam Reserving Issues Subgroup, which is working on a referral from the Risk-Focused Surveillance Working Group on risk-focused examination reserving issues.
• The Surplus Lines Task Force will hear a report from the Surplus Lines Financial Analysis Working Group on eligibility implications to surplus lines insurers resulting from implementation of the nonadmitted insurance subtitle of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act. A status update on state activities related to collection of surplus lines taxes will be provided.
• The Title Insurance Task Force’s Annual Statement Instructions Working Group will report on seven proposals approved by the Blanks Working Group, which involve improvements to the title annual statement and filing instructions that include crosschecks for title filing data.
  • The Task Force will consider a Title Agent Statistical Data Plan Implementation Guideline as recommended by the Title Statistical Plan Working Group. The guideline will assist the states in implementing the Title Insurance Agent Statistical Report. The data call report and guideline will assist members in the collection of various data elements that could be useful in market analysis and market regulation.
  • The Title Insurance Market Conduct and Mortgage Fraud Working Group will report on its activities related to reviewing and assisting various regulatory bodies in combating fraudulent or unfair real estate settlement activities. The Task Force will hear a report on a survey it recently conducted to determine whether members believe any revisions are needed to the Title Insurers Model Act (#628) and Title Insurance Agent Model Act (#230), and whether the Title Insurers Model Act should address standards for title insurance rates. The Task Force will hear a presentation creditors’ rights coverage and another on an interactive title insurance resource website. Finally, the Task Force will discuss increasing costs and closing responsibilities.
• In addition to holding its aforementioned panel, the Workers’ Compensation Task Force will receive a report on the NCCI CQA Inspection and Classification program
  • The NAIC/ International Association of Industrial Accident Boards and Commissions Joint Working Group will discuss a possible white paper on group self-insurance, medical electronic billing for workers’ compensation and the NCOIL Trucking and Messenger Courier Industries Workers’ Compensation Model Act.

 

MARKET REGULATION AND CONSUMER AFFAIRS COMMITTEE

The Market Regulation and Consumer Affairs Committee’s Consumer Disclosures Working Group will discuss new approaches to developing consumer disclosures.

• The Market Information Systems Task Force will discuss the next steps on the “Voice of the Customer” report, which focuses on how to enhance the NAIC databases used for market regulation.
• The Antifraud Task Force agenda includes discussions on an assignment from the Patient Protection and Affordable Care Act to create a uniform fraud reporting form for the secretary of the U.S. Department of Health and Human Services and a proposal to create an investigator/examiner field safety guideline or best practices.

 

FINANCIAL CONDITION COMMITTEE

The Financial Condition Committee will begin discussions on the use of captives by insurers and its impact on financial statements.

• The Accounting Practices and Procedures Task Force Blanks Working Group will consider the supporting blanks proposals for changes to the 2011 filing instructions and any newly submitted proposals for exposure.
• The Statutory Accounting Principles Working Group will consider proposed changes to statutory accounting principles, including guidance on accounting for income taxes.
• The Capital Adequacy Task Force will consider the adoption of changes to the Risk-Based Capital for Insurers Model Act (#312) related to changing the life trend test and the addition of fraternal benefit societies to the model. Deferred tax assets and capturing fraternal RBC data also will be discussed.
• Catastrophe Risk Subgroup will discuss plans to move forward with adding a catastrophe risk calculation to the property/casualty RBC formula.
• The Examination Oversight Task Force will review an update on the states’ adoption of the revised Hazardous Financial Condition Model Regulation (#385) and begin discussions on adopting suggested examiner salaries for 2012.
• The Climate Change and Global Warming Working Group will review its proposed 2011 work plan and Climate Risk Disclosure Survey results from California and the NAIC Climate Risk Disclosure Questionnaire Aggregated Summary as they pertain to new charges for the Working Group.
• The Reinsurance Task Force will vote on proposed amendments to the Credit for Reinsurance Model Law (#785) and Credit for Reinsurance Model Regulation (#786) to make them consistent with key elements of the Reinsurance Regulatory Modernization Framework.  Updates also will be given on activities of the IAIS Subcommittee on Reinsurance and Other Forms of Risk Transfer.
• The Risk Retention Group Task Force will begin discussions on possible risk-focused examinations best practices and will consider developing a document regarding interview questions for captive managers.
• The Valuation of Securities Task Force will consider an amendment to reporting instructions pertaining to U.S. government securities. It also will consider adoption of final instructions for residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities and may vote to remove these asset classes from regulatory review.  The Task Force will vote to reverse or to retain earlier decisions made with respect to the modified filing exempt rule, including the use of a pricing matrix for all loan-backed and structured securities as defined by SSAP No. 43R-Loan-backed and Structured Securities and the state rating process. Further, the Task Force will hear a report on the status of the project to recognize the working capital finance notes program as an invested asset and will hear a number of staff reports, including the status of a project to remap (i.e., recalibrate) NAIC designations; issues presented by the use of special rating symbols and other issues in structured finance; plans for the 2011 year-end RMBS/CMBS financial modeling process and a report on recent legal, regulatory and market developments pertaining to money market funds and its impact on Securities Valuation Office operations.

 

FINANCIAL REGULATION STANDARDS AND ACCREDITATION COMMITTEE

The Financial Regulation Standards and Accreditation Committee will consider the adoption of 2008 revisions to the Model Regulation to Define Standards and Commissioner’s Authority for Companies Deemed to be in Hazardous Financial Condition (#385) as an addition to the NAIC accreditation standards.   The Committee also will discuss and consider exposure of the 2010 revisions made to the Insurance Holding Company System Regulatory Act (#440) and the Insurance Holding Company System Model Regulation (#450).   It also will consider offering for comment a recommendation from the Risk Retention Group Task Force on risk-based capital requirements for risk retention groups.

 

INTERNATIONAL INSURANCE RELATIONS COMMITTEE

The International Insurance Relations Committee will discuss progress on four of the IAIS initiatives, including the Common Framework for Internationally Active Insurance Groups, revisions to IAIS Insurance Core Principles, the Supervisory Forum and the Financial Stability Committee.  Europe’s Solvency II and third-country equivalence also will be discussed.

 

NAIC/CONSUMER LIAISON COMMITTEE

The NAIC/Consumer Liaison Committee will discuss the value of consumer testing with a range of approaches and lessons learned from consumer testing.   Pat McCoy from the Consumer Financial Protection Bureau will describe online consumer testing.  Consumer complaint trends will be discussed, along with an analysis of insurance department complaints and concerns. The Committee also will review loopholes in the federal Patient Protection and Affordable Care Act, health insurance exchanges, federal regulations and issues for states and Medical Loss Ratio requirements.

 

To unsubscribe from this newsletter, please send an email to Brooke Ellis at bellis@cftlaw.com.