Insurers Want More Efficient Securities Valuation

NU Online News Service, Sept. 30, 5:05 p.m. – Some insurers are complaining that state regulators are using inefficient methods to collect data about the investments in the insurers’ portfolios.

But regulators at the National Association of Insurance Commissioners, Kansas City, Mo., say they need to collect enough information about insurance companies’ portfolios to check the companies’ financial strength.

The conflict over the data-collection effort came up several times during a recent meeting of the NAIC’s Securities Valuation Office oversight working group .

The Securities Valuation Office is an NAIC body based in New York that monitors insurers’ investments.

The National Association of Mutual Insurance Companies, Indianapolis, helped focus attention on the securities valuation process by releasing a paper that calls for changes to procedures for filing securities information with the SVO.

NAMIC recommends that the SVO eliminate redundant ratings activities and redundant personnel and facilities associated with investment ratings.

NAMIC also recommends that the SVO provide complete information about SVO revenues and expenses; provide research to regulators on an as-needed basis, rather than on an unlimited basis; and allow ratings of securities that are not rated by nationally recognized securities rating organizations only to the extent that the SVO successfully competes with the nationally recognized organizations.

The SVO working group itself is looking into the possibility of creating a “subsequent exemption” rule. The rule would exempt securities that have been filed with the SVO from having to be refiled.

Another proposal would make a preliminary-exemption available for securities that meet SVO safety criteria.