Members of the National Association of Insurance Commissioners voted unanimously here to approve a short-term rule for assessing the riskiness of hybrid securities.
Meanwhile, the NAIC’s hybrid risk-based capital working group approved a work plan for developing a long-term solution to the hybrid securities valuation controversy.
The working group changed the work plan slightly before approving it, and officials say it will continue to fine-tune the plan, which was developed by the American Academy of Actuaries, Washington.
The NAIC, Kansas City, Mo., has been trying to develop a rule that insurers can use this year when making risk-based capital calculations, but the NAIC also is trying to develop another, long-term approach.
The AAA work plan is defining the term “hybrid securities” to include “those securities whose proceeds are accorded some degree of equity treatment to the issuer by one or more of the nationally recognized statistical rating organizations and/or which are recognized as regulatory capital by the issuer’s primary regulatory authority.”
The hybrid RBC working group removed a work plan draft sentence that noted that receiving input from parties other than the AAA is the responsibility of the NAIC’s hybrid task force.
Nancy Bennett, a life actuary representing the AAA, said the AAA will look at hyrid risk from the investor’s perspective rather than at risk from the issuer’s perspective.
The NAIC plenary, the body that represents all voting NAIC members, also approved:
- The Long-Term Care Insurance model act and regulation, which will require states that implement it to mandate 8 hours of agent training for new LTC insurance producers and 4 hours per year of follow-up training. The model also would allow for more flexibility in LTC insurance contracts.
- The Producer Training model bulletin, for policies issued under a qualified state LTC insurance partnership.
- The Unauthorized Transaction of Insurance Criminal model act, which would make it a felony for an agent to knowingly sell insurance from an insurer that was not authorized to do business in the agent’s state.
- Changes to the market regulation handbook.
- A resolution concerning military life sales.
Georgia Insurance Commissioner John Oxendine sponsored an NAIC resolution supporting the idea of the insurance industry helping service personnel who are overseas and cannot readily make premium payments because of their service.
“It is of vital importance that we show Washington what we can do,” Oxendine said. “I do not want this issue to be an argument for an optional federal charter or for federal regulation.”
“For those who have served in the military, this is a very emotional issue,” said Texas Insurance Commissioner Michael Geeslin. “We have to make certain that we show a silent strength and not something geared toward a public relations campaign.”