The American Insurance Association secured its top priority, reopening of the Model Holding Company Model Law for further modification, at the recent spring meeting of the National Association of Insurance Commissioners in Orlando.
The NAIC Executive Committee voted by voice vote at the conference’s plenary session last Sunday to approve reopening the Model Holding Company act to change, after adding some guidance. The issue was referred to the Financial Condition (E) Committee where development of any changes would take place as part of the 2014 work of the Group Solvency Issues (E) Working Group. The NAIC expects that any amendments to the Act would be completed by year’s end.
“We don’t expect this to be a long process,” said Adam Kerns, AIA assistant general counsel. The Executive Committee “implied that they wanted this done as soon as practical.”
The AIA wants the E Group to develop uniform group supervision language that reflects the fact that interest in insurance regulation has changed to a global issue since the last model law was approved in 2010. It’s estimated there are 20-some states that have adopted the latest version of the Holding Company Model Law, Kerns said.
“As things seemed to start moving quickly on the international regulatory front, states were taking it upon themselves to amend their Model Holding Company Acts to address the issue of group-wide supervision,” Kerns said in explaining why AIA has established uniformity as a priority.
“It became quite apparent that the NAIC needed to re-open the Model in order to develop uniform language for the states to adopt on this issue,” Kerns said. “It is important that when these Models are enacted in the states that they are done so uniformly.”
“The justification for prompt NAIC action is that states have been adopting Model Law Holding Company Acts that are somewhat different than the model, which presents problems to our members,” added Lisa Brown, AIA senior counsel & director of Compliance Resources. “Without uniformity, it presents the potential for conflicts between the states. We want a uniform process developed.”
This is not product specific, nor line specific,” Brown said. “It just deals with how you are regulated; it needs to be uniform.”
She acknowledged that a primary AIA concern is for a uniform U.S. approach as international regulatory discussions “move along rapidly.” Brown said the talks are aimed “at speaking a common language in overseeing insurance companies, and it was felt that a uniform stance from U.S. regulators was important.”
Another issue is modernization of rate and form regulation across state lines. She said this would also likely impact foreign insurers looking at U.S. markets “who might be discouraged because of the onerous regulatory regime.”
On the other hand, she said, “inaction would at the same time lessen the willingness of foreign governments and insurers to let U.S. companies compete. It could be a trickle-down.”