NAIC Property and Casualty Risk-Based Capital Working Group Meeting Report: June 21
Jun 22, 2011
The National Association of Insurance Commissioners (“NAIC”) Property & Casualty Risk-Based Working Group (“Working Group”) met briefly via teleconference on June 21, 2011 to finalize a letter to the NAIC Examination Oversight Task Force (“Task Force”) on catastrophe modeling data.
Chairperson Anne Kelly told the Working Group that 2010 Risk-Based Capital (“RBC”) results appeared favorable, with no dramatic changes from the year before.
“We seem to have had a pretty good year–RBC-wise,” Ms. Kelly stated.
The Working Group then voted to approve the updated 10-year average underwriting industry factors.
Most discussion during the short meeting focused on approving a draft letter to the Task Force requesting assistance regarding Catastrophe Model data verification. The letter asks for help developing examination procedures for validating catastrophe modeling data that will be used to determine catastrophe risk charges to be included in the Property/Casualty Risk Based Capital (“P/C RBC”) formula.
“Some issues we are concerned with are that the data that will be used for modeling results is not something that shows up in financials,” said one Working Group member. “This is really quite a departure for us to be using individual company data that is not specifically financial. We are pretty sure it’s data they have. We just don’t want them to give us data that is not meaningful.”
Another Working Group member pointed out that when catastrophe models are run, they are not based on live data because a time lag is involved. Data being run for a company’s enterprise risk management process is more current, he said. He wondered how the time lag would have to be addressed.
After editing several sentences in the draft letter, the Working Group voted to send the revised draft to its parent group so it could be forwarded to the Task Force.
In other business, the Working Group affirmed that it never intended to change the underlying risk charges in the 2011 P/C RBC formula.
Should you have any comments or questions, please contact Colodny Fass.
To unsubscribe from this newsletter, please send an email to Brooke Ellis at bellis@cftlaw.com.