War Of The Worlds?
While the big summer movie release “War of the Worlds” is packing crowds into theaters, insurance regulators may well be wondering if they are being besieged.
Is SMART, that flaming object catapulted from Washington and aimed at Kansas City, threatening to destroy the insurance regulatory world as they know it?
SMART, the State Modernization and Regulatory Transparency Act, generated “a lively discussion” among commissioners during the recent summer meeting of the National Association of Insurance Commissioners, Kansas City, Mo. This took place before a full-dress congressional hearing on June 16 on SMART and the effectiveness of state insurance regulation.
But before regulators, insurers and the consumers who buy insurance take flight in panic, they might want to consider what they are witnessing. Are they really seeing a Martian invasion? Or is it instead a series of fundamental shifts in the industry that presage change rather than doom?
Some high priority issues aired at the summer NAIC meeting suggest a fundamental change in the way the business is viewed–from the inside and out.
This is not always bad. For example, rather than portending calamity, an issue such as using a principle-based approach for reserving and risk-based capital may offer tremendous opportunity if executed properly.
It was suggested, for instance, that a more flexible approach to reserving could make for better use of capital and make it possible to offer new products.