NU Online News Service, March 11, 1:13 p.m. — Atlanta
The New York State Insurance Department presented a four-part plan here for streamlining the work of the Securities Valuation Office, an arm of the National Association of Insurance Commissioners, Kansas City, Mo.
The SVO is responsible for valuing the securities owned by state-regulated insurance companies and assessing the securities’ credit quality.
One part of the New York plan, which was unveiled at the NAIC’s spring meeting, calls for exempting all securities that receive top 1 and 2 ratings from the NAIC.
Another part of the plan calls for the SVO to establish a procedure for utilization of research resources.
A third part of the plan could eventually lead to an exemption for all securities rated by a major rating agency, and a fourth part could eventually lead to consideration of alternatives for the review of unrated securities.
NAIC officials expect to give the plan a 45-day exposure period. Officials could implement it at the NAIC meeting in June.
New York Superintendent Greg Serio told attendees at the SVO session that the plan “provides an opportunity to take a powerful tool and make it more powerful” without hurting SVO revenue.
Serio said insurers have expressed an interest in getting away from the current “a la carte” fee structure for SVO services.
The NAIC has been looking at the possibility of changing the SVO fee structure since 1999, when it prepared a study on ideas for making the office more efficient.
The NAIC has received the New York plan at a time when many insurers are reporting an unusually high level of problems with the bonds and other securities in their portfolios.
But, in an interview, Serio said using the SVO simply to confirm credit ratings is a bad use of SVO resources.
The current system is especially burdensome for smaller insurers, Serio added.