NAIC Winter 2009 National Meeting Preview

Nov 10, 2009

The National Association of Insurance Commissioners (“NAIC”) Winter 2009 National Meeting is scheduled for December 5 – 8, 2009 in San Francisco at the Hilton San Francisco Union Square.

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

A current version of NAIC models, guidelines, and white papers that are pending adoption during the 2009 Winter National Meeting may be viewed by clicking here.

Property and casualty insurance-related highlights:

  • The Casualty Actuarial and Statistical Task Force will discuss proposed changes to the Catastrophe Modeling Handbook, as well as issues such as line of business definitions, workers’ compensation large deductibles and statistical reporting.
  • The Surplus Lines Task Force will discuss the activities of its Multi-State Surplus Lines Premium Tax Working Group and receive updated survey results relating to non-resident surplus lines producer licensing exemption and methods for implementing Nonadmitted and Reinsurance Reform Act requirements.
  • The Title Insurance Issues Working Group will discuss results of a state laws survey on the collectability of data from title agents, attorneys, abstracters and escrow officers under current state laws and regulations, as well as regulatory and marketing practices relating to title insurance. Members also will hear an update on House Resolution 3126: The Consumer Financial Protection Agency Act of 2009.
  • The Workers’ Compensation Task Force will receive the State-of-the-Line Annual Report on workers’ compensation from the National Council on Compensation Insurance. Updates also will be provided regarding proposed federal bill H.R. 635: To Establish The National Commission On State Workers’ Compensation Laws and the National Conference of Insurance Legislators’ Independent Contractor Model Law. 
    • The Task Force’s NAIC/International Association of Industrial Accident Boards and Commissions (“IAIABC”) Joint Working Group will meet to discuss activities of its two subgroups: the NCOIL Independent Contractor Model Law Subgroup and the Independent Contractor Trucking Issues Focus Group. 

Life and health-related highlights:

  • The Life and Health Actuarial Task Force meeting will focus on Valuation Manual (“VM”)-20: Requirements for Principle-Based Reserves for Life Products, which is referenced in the Standard Valuation Model Law (#820) that was adopted by the NAIC at the Fall National Meeting. The discussion of VM-20 will focus on a net premium reserve method, economic scenarios and default costs on fixed income investments. Other valuation manual discussions will include experience studies, the scope of the initial implementation of principle-based reserves and reporting requirements.
  • The Life Insurance and Annuities Committee is scheduled to hear a presentation on Stranger-Originated Life Insurance/Investor-Originated Life Insurance (“STOLI/IOLI”) Marketing Programs, which are also known as “hidden” life settlements.
  • The Annuity Disclosure Working Group will meet to discuss revisions to the Annuity Disclosure Model Regulation (#245), including adding guidelines on the use of illustrations in the sale and solicitation of fixed annuities. Members also will review recent revisions to the NAIC Annuity Buyer’s Guide.
  • The Suitability of Annuity Sales Working Group will discuss further revisions to the Suitability in Annuity Transactions Model Regulation (#275).

 

 Financial condition-related highlights:

  • The Special Accreditation Standards Working Group will continue to explore the concept of states being held accountable to the minimum standards of their own market regulation plans, in lieu of all states being held accountable to one set of uniform standards.
  • The Statutory Accounting Principles Working Group will consider proposed statutory accounting changes, including accounting for investments at fair value and financial guaranty insurance contract disclosures.
  • The Capital Adequacy Task Force is scheduled to receive an update from the Valuation of Securities Task Force regarding the residential mortgage-backed securities (“RMBS”) proposal. Whether a recommendation should be made to the Financial Regulation Standards and Accreditation Committee regarding the newly adopted Risk-Based Capital (“RBC”) for Health Organizations Model Act (#315) and whether or not it should become an accreditation standard also will be discussed. Task Force members also may consider changes to the RBC treatment of deferred tax assets for affiliate guarantees and review any actions from its working groups.
  • The Life Risk-Based Capital Working Group will discuss adoption of a derivatives risk mitigation proposal and the American Academy of Actuaries’ C-3 Phase III proposal, as well as discuss the long-term mortgage calculation.
  • The Property Risk-Based Capital Working Group will hear a proposal to expand Schedule P Blanks for certain lines of business. An update on the pending draft of a catastrophe risk proposal also may be given.
  • The Examination Oversight Task Force will hear an update on states’ adoption of the recently revised Hazardous Financial Condition Model Regulation (#385).
  • The Rating Agency Working Group will consider adoption of its final report to be submitted to the Financial Condition Committee, which provides recommendations on how state insurance regulators might lessen their reliance on Nationally Recognized Statistical Rating Organization (“NRSRO”) credit ratings in the scope of their oversight.
  • The Receivership and Insolvency Task Force will continue discussion on possible solutions for timely collection of reinsurance recoverables held by insurers that are currently in receivership.
  • The Reinsurance Task Force will continue its discussion regarding implementation of the Reinsurance Regulatory Modernization Framework Proposal Memorandum and the recent adoption of the Reinsurance Regulatory Modernization Act of 2009. Updates will be given on work related to reinsurance options that are being pursued by the U.S. Congress and the International Association of Insurance Supervisors’ (“IAIS”) Subcommittee on Reinsurance and Other Forms of Risk Transfer.
  • The NAIC/AICPA Working Group will hear an update on recent American Institute of Certified Public Accountants (“AICPA”) activities and actions related to insurance accounting.  A progress report on states’ adoption of revisions to the Model Audit Rule will be given, along with consideration of changes to its accompanying Implementation Guide.  Examiner access to Certified Public Accountant work papers prior to the release of an audit report is also on the agenda.

 

 International insurance relations highlights:

  • The International Insurance Relations Committee will continue its discussion on the strategic planning initiative of the International Association of Insurance Supervisors (“IAIS”), including: new work being undertaken regarding the supervision of internationally active insurance groups; the “role and structure” of the IAIS in a 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; and scheduling regulatory dialogues during the IAIS Annual meeting with regulators from Europe, Japan and Latin America.

 

Joint Executive Committee/Plenary highlights:

The Executive Committee/Plenary also will receive progress reports on the states’ implementation efforts of the following recently adopted NAIC model laws or regulations:

  • Viatical Settlements Model Act (#697) amendments;
  • Model Regulation Permitting the Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities (#815) amendments;
  • Standard Valuation Law (#820) amendments;
  • Actuarial Opinion and Memorandum Regulation (#822) amendments;
  • Valuation of Life Insurance Policies Model Regulation (#830) amendments;
  • Uniform Health Carrier External Review Model Act (#76);
  • Medical Professional Liability Closed Claim Reporting Model Law (#77);
  • Model Regulation on the Use of Senior Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities (#278);
  • Long-Term Care Insurance Model Act (#640) amendments;
  • Long-Term Care Insurance Model Regulation (# 641) amendments;
  • Model Regulation to Implement the NAIC Medicare Supplement Insurance Minimum Standards Model Act (#651) amendments;
  • Derivative Instrument Model Regulation (#282) amendments;
  • Risk-Based Capital (RBC) for Health Organizations Model Act (#315) amendments;
  • Model Regulation to Define Standards and Commissioner’s Authority for Companies Deemed to be in Hazardous Financial Condition (#385);
  • Life and Health Insurance Guaranty Association Model Act (#520) amendments; and
  • Property and Casualty Insurance Guaranty Association Model Act (#540) amendments.

 

NAIC Liaison Committee highlights:

  • The NAIC/Industry Liaison Committee is scheduled to address the following agenda items:
    • The Center for Insurance Policy and Research (“Center”):  Ways in which the insurance industry can access the Center’s data, how the Center would operate within the potential Federal Insurance Office and how the Center supports the NAIC Solvency Modernization Initiative Task Force;
    • The NAIC National Catastrophe Model System initiative;
    • Financial and market conduct company examination costs; and
    • The NAIC’s use of credit rating information.
  • The NAIC/State Government Liaison Committee is expected to address the following agenda items:
    • Regulatory initiatives and emerging federal issues, such as systemic risk regulation and resolution authority;
    • Individual state legislative priorities;
    • The Interstate Insurance Product Regulation Compact;
    • Market Conduct Annual Statement activity; and
    • NAIC regulatory modernization initiatives.

 

Special Sessions will be held to highlight the following five topical insurance-related issues:

  • Perspectives on Systemic Risk
    • On Thursday, December 3, the NAIC Center for Insurance Policy and Research will sponsor a panel of experts to discuss aspects of systemic risk in insurance and its regulation.  Panelists will discuss international views about systemic risk, its pros and cons, and address the concept of institutions that are “too big to fail.”  The regulation of systemic risk in banking compared to that in the insurance industry also will be discussed.
    • Health Care Reform Update
      • On Friday, December 4, the Health Insurance and Managed Care Committee will hold a public hearing on health care reform implementation issues.  Testimony will be heard on potential implementation issues that could arise if health care reform is enacted in 2009. 
      • Residential Mortgage Backed Securities Briefing
        • On Monday, December 7, the Valuation of Securities Task Force will sponsor an industry briefing on residential mortgage-backed securities (“RMBS”).   During the meeting, State insurance regulators will consider the use of an analytical firm with expertise in RMBS to help determine the value of deteriorated holdings on insurers’ books, thereby bypassing the traditional providers’ ratings.  The briefing will provide an overview of what insurance companies need to know if this occurs. 
        • Earthquake Education Event
          • On Tuesday, December 8, the Earthquake Study Group of the Property and Casualty Insurance Committee will host an event on earthquake education and hear from experts on ways to educate and motivate the public to prepare for an earthquake strike.  The effect of scientific research on modeled losses, current challenges, a proposed solution for earthquake mitigation and the role of the federal government in natural catastrophe insurance also will be discussed.
          • Climate Change Risk Summit
            • The Climate Change and Global Warming Task Force will host a Climate Change Risk Summit on Wednesday, December 9 in order to allow regulators, scientists, modelers, industry members and the general public to explore climate-related topics.  The impact of climate change risks and opportunities on investments, evolving “green” insurance product offerings and the latest on climate science and climate risk modeling will be discussed.  A session on transparency and disclosure of climate-related risks by insurers will include information on completing the NAIC Climate Risk Disclosure Survey, which is due on May 1, 2010.

            To view the Special Session brochure, click here.

             

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

             

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