NAIC August 14-17 Summer 2010 National Meeting Preview

 

The National Association of Insurance Commissioners (“NAIC”) 2010 Summer National Meeting is scheduled for August 14-17 in Seattle, Washington.

Below are excerpts from the National Meeting preview, which highlights planned committee activities during the event.   To view the complete preview, click here.  To access the meeting agenda and registration information, click here.

Note: NAIC model numbers are provided in parenthesis where applicable.

 

Scheduled Public Hearings

• August 12:  The Health Insurance and Managed Care Committee Employee Retirement Income Security Act Subgroup and Market Regulation and Consumer Affairs Committee Antifraud Task Force will jointly host a public hearing on Limited Benefit Medical Care Plans and Fraud.  Discussion will include the product utility of Limited Benefit Medical Care Plans in relationship to sales and marketing abuses.  Additional information on the public hearing and comment period is posted on the Antifraud Task Force Web page at www.naic.org/index_committees.htm.
• August 17:  The Producer Licensing Task Force’s Producer Licensing Working Group will hold a public hearing to discuss producer licensing testing and examination development. This hearing is intended to provide an opportunity for pre-licensing education providers, testing vendors, test development specialists, regulators and interested parties to share state practices regarding the development and delivery of producer examinations. Those interested in providing testimony for this hearing should submit their intent to testify by July 23, or submit written testimony by August 5, 2010 to Greg Welker (gwelker@naic.org) at the NAIC.

 

NAIC EXECUTIVE COMMITTEE AND PLENARY JOINT MEETING

At its joint meeting, the NAIC Executive Committee and Plenary will consider the adoption of amendments to the Guidelines for Regulation and Legislation on Workers’ Compensation Coverage for Professional Employer Organization Arrangements (#1950), as well as three new guidelines:

• Guideline for Implementation of Medical Professional Liability Closed Claim Reporting
• The 2000 drafts of the Property and Casualty Rate and Form Model Law and the Property and Casualty Rate and Form Model Regulation

In addition, progress reports will be provided on states’ implementation efforts of recently adopted NAIC model laws, regulations or model amendments, among which include the Model Regulation to Define Standards and Commissioner’s Authority for Companies Deemed to be in Hazardous Financial Condition (#385) and the Property and Casualty Insurance Guaranty Association Model Act (#540).

Among other agenda items, the Executive Committee will consider a Request for Model Law Development on Model Law on Regulation of Insurance Scoring Vendors.

The Producer Licensing Working Group will meet to discuss progress on its key initiatives, including:  1) updating the State Licensing Handbook; and 2) developing a limited line that (a) encompasses several insurance products where the business of insurance is ancillary to the business of the person offering the product; (b) includes licensing requirements of individuals selling limited line insurance products; and (c) integrates fingerprinting of individuals selling limited line insurance products.

 

The Corporate Governance Working Group will review a summary of existing state corporate law prepared by the NAIC Legal Department and will hear a presentation on emerging best practices in corporate governance.

 

The Group Solvency Issues Working Group will discuss updates to a draft of Holding Company Best Practices.  Further dialogue on group-wide supervision will continue, during which comments on the draft of Holding Company Analysis Guidelines for the Accreditation Program will be discussed.  To view the working draft of this document, go to: http://www.naic.org/committees_ex_isftf_group_solvency.htm

 

The Statutory Accounting and Financial Reporting Subgroup will discuss comments to a recently exposed draft document identifying a continuum of possible choices for regulators to consider with respect to statutory accounting.

 

The Life and Health Actuarial Task Force will focus on the Valuation Manual referenced in the NAIC Standard Valuation Model Law (#820).  Dialogue regarding section VM-20: Requirements for Principle-Based Reserves for Life Products will likely focus the project on testing the impact of the methodology on reserves.  Other Valuation Manual-related discussions will include experience studies, the scope of the initial implementation of principle-based reserves and reporting requirements.

 

The Accident and Health Working Group will continue to work on a regulation to define the rebate calculation required by the Patient Protection and Affordable Care Act (“PPACA”).  Discussion also will continue on the Medicare Supplement Refund Formula and guidelines for rate filings.

 

The Regulatory Framework Task Force will discuss recent regulations promulgated by federal agencies charged with implementing the PPACA and those regulations’ correlative impact at the state level.  The Task Force also will begin discussions on developing a work plan to conduct a complete review of existing NAIC models and the development of any new NAIC models resulting from the enactment of PPACA.  

 

PROPERTY AND CASUALTY INSURANCE COMMITTEE

 

The Property and Casualty Insurance Committee will discuss progress on developing a data call for personal auto insurance related to insurers’ use of risk classifications, including credit-based insurance scores.  It will also discuss the Committee’s plans to develop a model law that would regulate vendors of insurance scoring information.

Committee members will consider the Auto Insurance Consumer Guide as approved by the Consumer Guides Working Group, as well as consider a motion to adopt recommendations relating to the allocation of surplus lines premium taxes.  The impact of the inclusion of the Non-admitted and Reinsurance Reform Act in the recent Financial Reform Legislation also will be discussed.

 

The Catastrophe Insurance Working Group will hear a presentation entitled “The Great Hurricane Blowout” from the Federal Alliance for Safe Homes, along with a presentation on Fire Gel technology.  The group will review an NAIC white paper on defective drywall and be updated on the National Flood Insurance Program.

 

The Crop Insurance Working Group will discuss progress made by state regulators to avoid possible preemption of crop insurance adjuster licensing, which could begin on a state-by-state basis starting July 1, 2011.  In addition, the National Crop Insurance Services will provide an update on the Crop Adjuster Proficiency Program.

 

The Risk Retention Working Group will discuss progress made towards updating the Risk Retention and Purchasing Group Handbook and will consider adding corporate governance standards to the Model Risk Retention Act.

 

The Title Insurance Issues Task Force will review reports on improving the title annual statement and filing instructions and the inclusion of crosschecks in providing title filing data.  If these 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 consider an agent statistical plan recommendation that could be useful in market analysis and regulation, thereby assisting state insurance regulators in analyzing the insurance marketplace. The National Conference of Commissioners on Uniform State Laws will provide an update on its efforts to consider a model law on mortgage subrogation.   The need to establish a working group to monitor mortgage fraud will be considered.

 

The Workers’ Compensation Task Force plans to receive the “State of the Line” annual report from the National Council on Compensation Insurance  (“NCCI”) that includes recent NCCI filing activities in the states.

 

The Large Deductible Study Implementation Working Group will consider its most recent draft on Third Party Administrator Guidelines.  The Model Law Review Working Group is expected to recommend whether or not the 1994 NAIC Twenty-Four Hour Coverage Pilot Project Model Act (#960) should be deleted, amended, or remain the same.  Also, an update will be given on H.R. 635, the proposed federal bill to establish a National Commission on State Workers’ Compensation Laws.

 

The Consumer Disclosures Working Group will discuss a draft model bulletin relating to states’ granting a safe harbor of compliance with state privacy notice requirements when insurers use the new Federal Model Privacy Form.

 

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 NAIC Market Regulation Handbook.

 

FINANCIAL CONDITION COMMITTEE

 

The Financial Condition Committee will consider final action on proposed modifications to the NAIC Insurance Holding Company System Regulatory Act (Model #440) and the NAIC Insurance Holding Company System Model Regulation with Reporting Forms and Instructions (Model #450).  

 

The Blanks Working Group will consider allowing external comment on newly submitted proposals that recommend changes to the Annual and Quarterly Financial Statement.  Proposals deferred from a previous meeting include the addition of additional columns to the reinsurance schedules for identifying the banks issuing or confirming letters of credit and the addition of a supplement for the reporting of directors and officers business.

 

The Statutory Accounting Principles Working Group will consider proposed changes to statutory accounting principles, including SSAP No. 5R-Liabilities, Contingencies and Impairments of Assets – Revised relating to guarantees issued by insurers, as well as SSAP No. 35R–Guaranty Fund and Other Assessments – Revised relating to liability recognition of guaranty fund accruals.

 

The Life Risk-Based Capital Working Group will discuss the American Academy of Actuaries C-3 Phase III proposal, as well as a commercial mortgage calculation and derivatives risk mitigation proposal.

 

The Examination Oversight Task Force will receive reports and consider action on the work of the Analyst Team System Oversight Working Group, Financial Analysis Handbook Working Group, Financial Analysis Research and Development Working Group, Financial Examiners Handbook Technical Group, Financial Examiners Coordination Working Group and the Information Technology Examination Working Group.  Included within this work is new guidance for conducting examinations of risk-retention groups and a new framework for coordinating holding company group examinations.  An update will also be provided on states’ adoption of the recently revised Hazardous Financial Condition Model Regulation (#385).

 

The Receivership and Insolvency Task Force will discuss possible solutions for the  timely collection of reinsurance recoverables held by insurers that are currently in receivership.

 

The Valuation of Securities Task Force will hear status reports on its recommendations that Residential Mortgage-Backed Securities (“RMBS”) and Commercial Mortgage-Backed Securities (“CMBS”) valuations for year-end 2010 (and possibly also for Asset-Backed Securities (“ABS”) should be developed by a financial modeler working with the Securities Valuation Office (“SVO”).  The Task Force also will consider whether additional guidance is necessary for RMBS, CMBS and ABS securities that are filed with the SVO and discuss proposed revised structured securities guidance for the Purposes and Procedures Manual.  A presentation on a proposed amendment to file requirements for subsidiary, controlled and affiliated companies also will be made.

Given its concern for insurer compliance with accounting, reporting and filing requirements, the Task Force may discuss the need for guidance to insurer on loan-backed and structured securities as defined by SSAP No. 43R;  as well as the SVO’s role in assessment of these securities, the relevance of SVO assigned group codes and extensions and how the SVO can assist regulator enforcement efforts.

The Task Force agenda also includes:

• A discussion of recommendations on lessening the NAIC’s reliance on credit ratings
• The appropriateness of creating a filing exemption for certificates of deposit issued by FDIC insured banks
• Whether the self-designation process applicable to insurers that do a majority of their premium generation business in foreign countries should be extended
• Whether a decision on the probable regulatory treatment for contingent capital securities should be deferred

The Task Force also is expected to decide whether to implement a proposal to modernize and expand the prohibition against the use of NAIC designations as a trigger in private loan and other agreements between insurers and their borrowers.

 

FINANCIAL REGULATION STANDARDS AND ACCREDITATION COMMITTEE

 

The Financial Regulation Standards and Accreditation Committee will discuss significant revisions to the Financial Condition Examiners Handbook made during 2009 that are referenced in the accreditation standards.  It will also discuss allowing further comments on 2009 revisions made to the Standard Valuation Law (#820).  In addition, adoption of additional language for the current Part A: Laws and Regulations Standards for RRGs will be considered.   A discussion of new Part A items applicable to Risk Retention Groups (“RRGs”) based on recent revisions to NAIC models will be part of the agenda.

The Committee also will consider proposed revisions to the Computer Audit Expertise Guidelines within the Part B: Financial Examinations’ Use of Specialists standard.  Proposed revisions to the second guideline in the Appropriate Depth of Review standard within the Part B: Financial Analysis section will be discussed, along with the possibility of a possible referral to the Financial Analysis Handbook Working Group regarding the addition of certain items to the Form A Checklist.

 

INTERNATIONAL INSURANCE RELATIONS COMMITTEE

 

The International Insurance Relations Committee will continue discussions on International Association of Insurance Supervisors (“IAIS”) initiatives, including:  1) Common Framework for Internationally Active Insurance Groups; 2) consultation on draft revisions to IAIS Insurance Core Principles; 3) an internal strategic review of efficiency, effectiveness and structure of the IAIS; and 4) development of macro-prudential surveillance and market analysis tools.

 

NAIC/CONSUMER LIAISON COMMITTEE

 

The NAIC/Consumer Liaison Committee will discuss the pricing and financial structure of residual market/quasi-public property insurance entities, consumer disclosures, PPACA implementation issues and insurance industry implementation of the Federal Privacy Model Form.

 

 

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