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NAIC Gears Up For Capital Plan Hearing - And Vote

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The National Association of Insurance Commissioners says it will hold separate “yes or no” votes Jan. 29 on each of the 9 sections of the American Council of Life Insurers’ proposal for changing capital and surplus rules.

Members of a capital and surplus working group at the NAIC, Kansas City, Mo., will provide recommendations on each of the 9 points.

Both the NAIC executive committee and the NAIC plenary – the body that includes all voting members of the NAIC – will meet during the Jan. 29 call, officials say.

If members vote to accept a recommendation, the NAIC executive committee and plenary members will decide whether the recommendation should be prospective or retrospective, officials say.

The ACLI, Washington, presented the proposal in November 2008.

The capital and surplus working group will prepare for the vote by holding a public hearing on the ACLI proposal Jan. 27 in Washington.

Some of the witnesses scheduled to testify include Bob Hunter of the Consumer Federation of America, Washington; Peter Gallanis, of the National Organization of Life & Health Insurance Guaranty Associations, Herndon, Va.; Scott Harrison of the Affordable Life Insurance Alliance, Washington; and Bradley Smith of Milliman Inc., Seattle.

The ACLI and a UNITE HERE, a labor union, also will be sending witnesses, officials say.

Whit Cornman, an ACLI spokesperson, says adopting the proposal would help insurers use capital more efficiently and provide a more accurate picture of their financial strength.

“Our proposal before the NAIC is intended to release capital that is currently being tied up by ultra-conservative capital and reserving standards,” Cornman says.

Adoption could be important for producers as well as for insurers, Cornman adds.

“With this more accurate picture, producers can provide better guidance to their clients in these turbulent economic times,” Cornman says.

Christopher Greis, president of Leaders Partners Inc, Great Barrington, Ill., a brokerage general agency which acts as a wholesaler to financial planners and producers, says the financial strength of an insurer will be critical this year.

To date, “we don’t think that we have seen the flight to quality at the retail level,” Greis says.

But publicity about problems at banks could change that this year, Greis says.

Greis says his firm prefers to work with life insurers that have at least an A plus rating.