National Association of Insurance Commissioners (NAIC) Summer 2013 Annual Meeting Preview–August 24-27

 

The National Association of Insurance Commissioners (“NAIC”) will hold its Summer 2013 National Meeting on August 24-27 in Indianapolis, Indiana.

To view the conference Web page, which includes a complete meeting preview and tentative agenda, click here.

Below are highlights of the scheduled committee meetings and other events:

• The “Exploring Insurers’ Liability Summit,” hosted by the NAIC’s Center for Insurance Policy and Research will take place from 10:00 a.m. to 2:30 p.m. on Tuesday, August 27.  The event will feature discussions on the changes contemplated in measuring life insurer liabilities using a principle-based approach.  For property and casualty insurers, the exploration will look at the Statements of Actuarial Opinion, actuarial opinion, and the impact of the underwriting cycle or reserves. Loss reserve discounting also will be discussed.  Panelists will cover expectations of the Office of Financial Research with regard to insurer liabilities.  Presentations will be given from an assortment of perspectives, including federal, industry, academic and consumer.  The NAIC is advising that advance registration is required to participate in this event due to space limitations.

• Among other agenda items, the Executive Committee will consider approving model law development requests for the Annual Reporting of Corporate Governance Practices of Insurers Model Act and amendments to the Annual Financial Reporting Model Regulation (#205).

• The Life Actuarial Task Force will consider the adoption of amendments to the Valuation Manual and also discuss plans for coordination with the Principle-Based Reserving Implementation Task Force, which will include issues related to modification of annual statement blanks.  Task Force members will consider questions regarding amendments to Actuarial Guideline XXXIII-Determining CARVM Reserves for Annuity Contracts with Elective Benefits (AG 33). As part of the agenda, the American Academy of Actuaries (“AAA”) will provide a report on nonforfeiture modernization, inasmuch as the Task Force will be providing guidance on future AAA nonforfeiture activities. Reserve-related items will also be discussed.

• The Property and Casualty Insurance Committee will discuss possible data collection related to lender-placed insurance and will likely consider adoption of an Auto Shopping Tool.  The Committee will hear a presentation on the forecasting of hurricanes; as well as one on catastrophe modeling issues from Risk Management Solutions (“RMS”).  A software developer will be on hand to discuss vehicle tracking and antifraud software.

• The Advisory Organization Examination Oversight Working Group will discuss plans to update Chapter 25 of the Market Regulation Handbook and procedures for adopting Advisory Organization Exams.

• The Auto Insurance Study Group will hear presentations from several states on data collection and initiatives related to low-income households and the auto insurance marketplace.

• The Catastrophe Insurance Working Group will hear a presentation on Catastrophe Savings Accounts (CSAs) and discuss a uniform catastrophe reporting form, among other agenda items.

• The Transparency and Readability of Consumer Information Working Group will receive presentations on the availability of insurance policies online. Members are charged with increasing consumer accessibility to different carriers’ policy forms on a presale basis, as well as facilitating consumers’ understanding of the content of insurance policies and assess differences in insurers’ policy forms.

• The Terrorism Insurance Implementation Working Group will discuss the potential reauthorization of the Terrorism Risk Insurance Act, including the possibility of including coverage for acts of cyber-terrorism. RMS representatives will discuss the Boston Marathon bombings from a terrorism modeler’s perspective.

• The Casualty Actuarial and Statistical Task Force will discuss proposed revisions to the Annual Statement Instructions regarding Schedule P and hear two presentations from the AAA: one on Property and Liability Financial Reporting and another on Qualification Standards.

• The Surplus Lines Task Force will hear a report by the Surplus Lines Requirements Subgroup that will summarize efforts to identify a uniform approach to state nonadmitted insurer eligibility requirements. (The Surplus Lines Requirements Subgroup is not meeting at the Summer National Meeting.)

• The Workers’ Compensation Task Force will discuss the impact of the recently approved opt-out legislation in Oklahoma. Members will hear a presentation from the National Council on Compensation Insurance (NCCI) on the current state of the standard and residual workers’ compensation market; as well as from Gould and Lamb about Medicare Set Aside Provisions that affect workers’ compensation.

• The Market Regulation and Consumer Affairs Committee will discuss its proposal on corporate government enhancements as requested by the Corporate Governance Working Group.

• The Market Conduct Examination Standards Working Group will discuss Affordable Care Act (“ACA”) market conduct examination standards, ACA complaint coding and social media examination standards.

• The Market Information Systems Task Force will hear an update on its charge to develop a plan for making public data collected in the NAIC Management Information System more widely available.

• The Market Analysis Procedures Working Group will consider a process for the selection of new lines of business for the Market Conduct Annual Statement and revisions to the Market Analysis Review System Level 1 review template.

• The Antifraud Task Force will discuss its Fraud Investigator Safety Guidelines and suggested changes to the NAIC’s Online Fraud Reporting System.

• Emerging Actuarial Issues Working Group will discuss pending responses to currently exposed questions seeking interpretations of Actuarial Guideline XXXVIII-The Application of the Valuation of Life Insurance Policies Model Regulation (AG 38).  Adoptions of previously exposed responses and the exposure of recently drafted responses will be considered as appropriate.

• The Statutory Accounting Principles Working Group will discuss revisions to title insurance loss reserves; accounting for deferred compensation and postretirement benefit aspects of endorsement split-dollar life insurance arrangement; and quarterly reporting of residential mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”) purchased subsequent to year-end, and several other topics from GAAP pronouncements. The Working Group hopes to resolve discussions on accounting for ACA section 9010 fees payable to the federal government prior to the summer meeting, but if that does not occur, this is a possible topic.

• The Reinsurance Task Force will receive updates on efforts toward implementation of the revised Credit for Reinsurance Model Law (#785) and Credit for Reinsurance Model Regulation (#786), including updates regarding the states’ efforts to implement the revised models.  The Task Force will discuss the next steps regarding the Process for Developing and Maintaining the NAIC List of Qualified Jurisdictions,

• The Risk Retention Group Task Force will continue discussions on Part A standards that have changed in recent years, to include the following items: Risk-Based Capital for Insurers Model Act (#312), Model Regulation to Define Standards and Commissioner’s Authority for Companies Deemed to be in Hazardous Financial Condition (#385) and Credit for Reinsurance Model Act (#785).  The Task Force will also hear an update on the work of other NAIC groups related to captive insurers and risk retention groups.

• The Solvency Modernization Initiative Task Force will consider for adoption a white paper entitled The U.S. National State-Based System of Insurance Financial Regulation and the Solvency Modernization Initiative.

• The Corporate Governance Working Group will consider the formation of a subgroup to draft proposed internal audit function requirements and to receive input from interested parties on concepts to be included in a proposed corporate governance model law.

• The Group Solvency Issues Working Group expects to finalize a section to be included in the Financial Analysis Handbook on group supervision and a referral response letter to the Financial Examiners Coordination Working Group related to group supervision issues.

• The Valuation of Securities Task Force will hear the Securities Valuation Office (“SVO”) proposal for an amendment to the Purposes and Procedures Manual of the NAIC Securities Valuation Office that would permit the use of German GAAP without reconciliation.  The Task Force will consider adoption of a proposal that the NAIC expand the credit quality framework and symbols it uses, so that instead of one framework for all asset classes there would be three frameworks: corporate securities; municipal; and asset backed securities.  NAIC staff will be asked to identify the necessary changes in NAIC guidance before the SVO proposal could be adopted.  The SVO will present its thoughts on possible alternative approaches to change the way financial modeling of RMBS and CMBS is done by adding interest shortfalls and changing the discount policy used in the calculations.  The SVO will update the Task Force on RMBS/CMBS market trends to prepare for the 2013 year-end financial modeling project.  It is possible that the Task Force will consider adoption of staff recommendations for proposed Quarterly Reporting (of RMBS/CMBS) Instructions. The SVO will also propose an amendment to the Purposes and Procedures Manual of the NAIC Securities Valuation office to add instructions for filing of “residual” tranches of securitizations.

 

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