Industry Groups Expect Talks on International Issues, Accreditation, Cybersecurity at NAIC Spring Meeting
March 19, 2015 by Thomas Harman, associate editor, BestWeek: Tom.Harman@ambest.com
WASHINGTON – Insurance industry groups will be watching discussions on international issues, the Own Risk Solvency Assessment, captive reinsurer accreditation and cybersecurity during the upcoming National Association of Insurance Commissioners’ Spring National Meeting March 26-March 31 in Phoenix.
It will be the first meeting for the NAIC since the International Association of Insurance Supervisors proposed a risk-based global capital standard for all internationally active insurance groups (Best’s News Service, Dec. 17, 2014). Insurance trade groups made public comment asking the IAIS to use a more flexible approach and sought more time to consider ideas (Best’s News Service, Feb. 18, 2015).
More discussions about the international capital standard will be held during the March 28 scheduled meetings of the ComFrame development analysis working group and the international insurance relations committee, said Steve Broadie, vice president of financial policy at the Property Casualty Insurers’ Association of America. Broadie said the ICS is too complex, too top-down and must take into account the United State’s current jurisdictional system, which has protected policyholders. Broadie said PCI and others remain concerned about the lack of transparency in the IAIS deliberative process and said the NAIC should “have a robust procedure for letting us know what’s going on.”
Dave Snyder, PCI’s vice president of international policy, said because of what he said were “new closed-door procedures now implemented by the IAIS, it will be increasingly critical for the NAIC to provide a forum for all parties” to discuss capital standards, market conduct and corporate governance aspects that are the subject of IAIS core principles.
The IAIS is to meet with stakeholders this week in Rome to allow them to air concerns, said Michelle Rogers, director of financial and regulatory policy at the National Association of Mutual Insurance Companies. She said there are several more such meetings set for this year, including one scheduled for New York in May and Tokyo later this year. She said there is at least some hope the IAIS is giving stakeholder comments enough emphasis to consider delaying the capital standards adoption beyond 2016.
The financial regulation standards and accreditation committee is considering accreditation of the ORSA model law the NAIC approved in 2012. The American Insurance Association wants to improve confidentiality language in ORSA model act legislation because states have been approving versions that handle confidential information differently, said Adam Kerns, AIA assistant general counsel.
Rogers said several industry groups would discuss a recent joint letter submitted on ORSA accreditation. Any move toward ORSA accreditation should require ORSA contain the same confidentiality requirements as the ORSA model act, using language identical or “functionally equivalent” to that in the ORSA model, the letter said. The letter said if states cannot commit to the accreditation language on confidentiality as model language, the industry could not support ORSA legislation.
The same panel is also expected to discuss comments on the revisions to the accreditation guidance to treat certain captives and special purpose vehicles in the same manner as multistate insurers for accreditation purposes. Specifically, the panel is trying to answer the question about the clarity of provisions on whether reinsurers organized under captive law and reinsurance business written in other states should be considered multistate insurers subject to NAIC accreditation standards (Best’s News Service, Dec. 19, 2013). The second attempt at a draft was issued in late February that included variable annuities and long-term care reinsurance business as part of segments to be considered. Comments are due March 20.
The market regulation accreditation working group is drafting a proposal toward formal market conduct regulation. At the end of the panel’s Feb. 27 conference call, Chairman Bruce Ramge, Nebraska’s insurance director, said the various comments would be used to provide a draft document at the NAIC’s Phoenix meeting. “We want to make sure that whatever comes out of this, that it isn’t duplicative for companies,” said Deirdre Manna, PCI vice president, political engagement and regulatory affairs.
Industry groups also will be watching the NAIC’s cybersecurity task force, which will meet for the first time face-to-face since it was formed in November. The panel on March 13 issued an initial draft document that seeks a coordinated national approach toward developing regulatory cybersecurity guidance and a brief 10-day comment period is underway. Initial reaction from the AIA was that the draft provided a collaborative, flexible and risk-based focus. The draft contained 18 principles, including one that sought a coordinated nationwide approach among insurers, producers and the federal government toward developing regulatory guidance (Best’s News Service, March 13, 2015). NAIC President Monica Lindeen said last November that addressing cybersecurity issues would be a priority during her one-year term.
