National Association of Insurance Commissioners Adopts 2013 Committee Charges, Model Acts for Individual, Group Market Health Insurance Coverage, Task Force Changes

 

Florida Insurance Commissioner Kevin McCarty to Represent NAIC at International Association of Insurance Supervisors

During a brief joint meeting of the National Association of Insurance Commissioners (“NAIC”) Executive Committee and Plenary (“Committee”) on March 1, 2013, members unanimously and with no discussion adopted the 2013 NAIC committee charges, model acts for individual and group market health insurance coverage, the creation of two new task forces and the elimination of another.

To view the agenda and meeting materials, click here.

“We are pleased to officially adopt the committee charges, which form the framework of our regulatory agenda in 2013,” said Jim Donelon, NAIC President and Louisiana Insurance Commissioner.  “These charges articulate our most pressing initiatives and priorities, and highlight the ambitious goals of our committees.”

 

Executive Committee February 1, 2013 Minutes Approved

Of note, as part of the Committee’s approval of the NAIC Executive Committee’s interim meeting minutes from February 1, the process for naming state regulator members to the International Association of Insurance Supervisors (“IAIS”) Executive Committee was formalized to be the NAIC president, or his/her designee, and the NAIC CEO, or his/her designee.  For 2013, Florida Insurance Commissioner Kevin McCarty was selected to represent the NAIC on the IAIS Executive Committee, along with Connecticut Insurance Commissioner Thomas Leonardi.

Also for 2013, the NAIC will create a Financial Stability Task Force and a Principle-Based Reserving Implementation Task Force under the heading of the Executive Committee.  The AIG Managing Task Force will be eliminated.

Chaired by Commissioner Leonardi, with New York Superintendent of Insurance Benjamin Lawsky serving as Vice Chair, the new Financial Stability Task Force is charged with considering issues relating to domestic or global financial stability as they pertain to the role of state insurance regulators.  To do so, the Task Force will take into account regulators’ input on macro-financial vulnerabilities impacting the insurance sector by serving as a forum to coordinate their perspective on a wide variety of issues arising from the designation of U.S. insurance groups as systemically important-both pre and post-designation.  This will include: 

• Where appropriate, developing policy recommendations and/or guidance regarding the role, responsibilities and activities of state insurance regulators in the context of consolidated supervision resulting from designation
• Analyzing proposed rules by the federal agencies that relate to financial stability
• Analyzing proposed policy measures regarding supervisory standards for globally systemic important insurers

To be co-chaired by Rhode Island Superintendent Joseph Torti III and Tennessee Insurance Commissioner Julie Mix McPeak, the new Principle-Based Reserving (“PBR”) Implementation Task Force will have a two-fold purpose: 

• To serve as the coordinating body with all NAIC technical groups involved with projects related to the principle-based reserving initiative for life and health policies
• To further assess the solvency implications of life insurer-owned captive insurers and alternative mechanisms

The PBR Task Force also will develop, maintain and oversee components of the NAIC’s PBR implementation plan, including:

• Performing a fiscal and operational analysis regarding the implementation of PBR, including existing and necessary resources for states, NAIC and industry, and the new competencies required
• Developing an NAIC support and peer review system that works to ensure effective and consistent implementation of the PBR framework. Creating procedures for a new Actuarial Analysis Working Group to help ensure compliance with the Valuation Manual and consistent industry treatment
• To the extent possible, developing detailed tasks to NAIC technical groups to effectuate changes to blanks reporting, analysis procedures, examination procedures and statutory accounting standards
• Defining data to be collected
• Guiding and coordinating training for state insurance department analysis, examination and actuarial staff. Interacting with professional actuarial associations with regard to the training of insurance company actuarial personnel
• When appropriate, preparing accreditation-related recommendations for PBR
• Creation of a legislative information package regarding PBR to assist the states in their adoption effort
• Upon completion of the Captives and Special Purpose Vehicle Use Subgroup’s Report and subsequent referral by the Financial Condition Committee, consideration of its recommendations in the context of the proposed PBR system

Another change to the 2013 Committee was the elimination of the AIG Managing Task Force.  That Task Force, which had been charged with overseeing the regulatory activities related to the AIG insurance subsidiaries and coordinating interaction among state regulators, federal government officials, company representatives and international regulatory interests.

At its February 1 meeting, the Executive Committee also authorized the NAIC to provide public producer licensing and appointment information to the U.S. Department of Health and Human Services (“HHS”) pursuant to ongoing discussions with the HHS on health care reform implementation.  This action was approved at the March 1 meeting as well.

 

Additional Revisions to Committee Charges

A requirement to recommend a definition of “qualified actuary” for life, health and property and casualty appointed actuaries signing prescribed Statements of Actuarial Opinion Language, and identifying any differences that should remain between lines of business were among the changes to the Life Actuarial Task Force’s Joint Qualified Actuary Subgroup duties.

Additionally, the Subgroup is to recommend a uniform definition of “qualified actuary,” for other regulatory areas, such as rate filings and hearings.  The new language further states that the Subgroup will recommend a definition of inappropriate or unprofessional actuarial work, as well as a process for regulatory and/or professional organizations’ action(s).

To the Capital Adequacy Task Force description of duties, a requirement was added that any proposal that affects the risk-based capital structure must be adopted no later than April 30 in the year of the change.

The Receivership and Insolvency Task Force, part of the Financial Condition Committee, was charged with completing a study of critical elements related to recent revisions of the NAIC’s Insurer Receivership Model Act (#555).

To view a complete list of 2013 NAIC Committee charges, click here.

 

Health Coverage Model Acts Adopted

With two separate votes, the Committee unanimously adopted the Individual Market Health Insurance Coverage Model Act and the Small Group Market Health Insurance Coverage Model Act.  

The Individual Market Health Insurance Coverage Model Act sets forth requirements for guaranteed availability, guaranteed renewability and premium rating in the individual market and provides for the establishment of coverage and other benefit requirements in the individual market.

The Small Group Market version provides requirements for guaranteed availability, guaranteed renewability and premium rating in the small group market, as well as establishment of coverage and other benefit requirements in the small group market.

The complete text of both Models can be viewed in the meeting materials by clicking here (begins on Page 60).

 

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