NAIC Fall 2009 National Meeting Preview

The National Association of Insurance Commissioners (“NAIC”) Fall 2009 National Meeting is scheduled for September 21 – 24, 2009 in Washington, D.C. at the Gaylord National Hotel and Convention Center.

The meeting agenda and an official Preview have been published by the NAIC.  To access the complete Preview, click here.

Property and casualty insurance-related highlights:

• The Property and Casualty Insurance Committee and Market Regulation and Consumer Affairs Committee anticipate holding a joint meeting to discuss their April 30 public hearing on credit-based insurance scores. To view a report on the April 30 hearing, click here.
• The Rating Agency Working Group plans to hold a public hearing on Thursday, September 24.  No details have been released yet.
• From among the five approved NAIC technology initiatives currently in progress, the Information Systems Task Force will review a proof-of-concept study to build a national multi-peril model.
• The Property and Casualty Insurance Committee will discuss a possible survey of insurers and insurance regulators regarding risk-classification factors and the regulatory framework for monitoring insurers’ use of them. A progress report on the development of a public catastrophe computer simulation model feasibility study will be given.
• The Property and Casualty Insurance Committee will discuss contract language appearing in policies that provide professional liability coverage for directors and officers. The policy in question contains an exclusion of coverage under the contract for any claim made by a regulatory agency or any guaranty or insolvency fund. The Task Force is concerned that the policy language is inconsistent with sound public policy and, if the use of it were to become widespread, would diminish the assets available to guaranty funds for the protection of policyholders and claimants.
• The Capital Adequacy Task Force is scheduled to be updated on the impact of rating agency downgrades on residential mortgage-backed securities. Short-term guidance for the Federal Reserve’s Term Asset-Backed Securities Loan Facility (“TALF”) may be considered.

Life and health-related highlights:

• The Health Insurance and Managed Care Committee and related Task Forces will review NAIC models related to provisions contained in the Genetic Information and Nondiscrimination Act of 2008, the State Children’s Health Insurance Program special enrollment provisions and the Medicare Improvements for Patients and Providers Act.  Representatives from the U.S. Centers for Medicare and Medicaid Services and the U.S. Department of Health and Human Services will provide their respective updates.
• The Market Regulation and Consumer Affairs Committee will hold a public hearing with the Health Insurance and Managed Care Committee on usual, customary and reasonable rates (including the issue of balance billing), and how they are determined and disclosed to consumers. The objective of the hearing is to obtain a clearer understanding of current issues in the health and the property/casualty insurance marketplaces.

 Financial condition-related highlights:

• The Special Accreditation Standards Working Group will continue an open dialogue to explore the concept of states being held accountable to their own market regulation plans, which would meet a set of minimum standards, in lieu of all states being held accountable to one set of uniform standards.
• A significant item regarding impairment accounting for loan-backed and structured securities is expected to be adopted by the Financial Condition Committee prior to the Fall National Meeting.
• The Capital Adequacy Task Force will review an update from the Valuation of Securities Task Force on discussions regarding the impact of rating agency downgrades on residential mortgage-backed securities. The Task Force may consider short-term guidance for the Federal Reserve’s TALF.
• The Life Risk-Based Capital Working Group will discuss the long-term mortgage calculation, a derivatives risk-mitigation proposal and the American Academy of Actuaries’ C-3 Phase III proposal.
• The Examination Oversight Task Force will discuss states’ adoption of the recently revised Model Regulation to Define Standards and Commissioner’s Authority for Companies Deemed to be in Hazardous Financial Condition (#385).
• The Valuation of Securities Task Force will continue discussion of an American Council of Life Insurers proposal requesting modification of year-end 2009 risk-based capital charges for residential mortgage-backed securities and consider the merits of the NAIC purchasing credit ratings from RealPoint.

 International insurance relations highlights include:

• The International Insurance Relations Committee will review the strategic planning initiative of the International Association of Insurance Supervisors (“IAIS”), including:
  • New work being undertaken on supervision of internationally active insurance groups.
  • The “role and structure” of the IAIS in global standard-setting for the insurance sector.
  • The proper IAIS response to the current financial market situation, such as calls for an increased role by the IAIS in establishing macro-prudential oversight and coordinating supervisory colleges for insurance supervisors.
  • Scheduling regulatory dialogues during the upcoming IAIS annual meeting with regulators from Europe, Japan and Latin America.

Reports also will be provided on the NAIC’s coordination of input to the Financial Sector Assessment Program, which the International Monetary Fund is conducting on the entire U.S. financial system.

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

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