National Association of Insurance Commissioners executive committee members today voted 16-1 against supporting a package of capital and surplus rules changes proposed by the American Council of Life Insurers, with the commissioners repeatedly stating that they see no proof that an emergency exists.
Connecticut was the only state that voted for sending the measure to the plenary, the body that includes all voting members of the NAIC, Kansas City, Mo.
The ACLI, Washington, submitted the 9-point package to the NAIC in November 2008 and asked the NAIC to consider the package on an accelerated basis.
Members of the NAIC working group voted Tuesday to recommend NAIC adoption of 6 of the 9 components.
Proposal supporters said adopting the package as written could free up $25 billion to $30 billion in capital, an amount equal to about 6% to 7% of life insurers’ total 2007 adjusted capital, by updating needlessly conservative capital and surplus rules.
Critics questioned the need for unusually rapid action on the package and argued that the process for considering the proposal had been lacking in openness.
The executive committee vote will keep the NAIC plenary from voting on the package today, and it likely will stop the NAIC from pushing to let insurers incorporate the changes requested by the ACLI in the 2008 annual statements, which are due March 1. Regulators in individual states may still be able to implement some or all of the changes in their jurisdictions.
ACLI President Frank Keating said in a statement that the ACLI is “disappointed with the failure of the NAIC to provide uniform guidance to the states on how to respond to rapidly changing and volatile economic conditions. In absence of this uniform guidance, the responsibility to respond to these unprecedented economic conditions now falls to individual states.”
Many of the commissioners on the executive committee said that some of the proposals had merit and would be considered during the normal model law process, possibly for the 2009 annual statement. Indeed, at least one of those proposals, Actuarial VA-CARVM, which offers guidance on reserving for variable annuities with guarantees, already is scheduled to take effect in time for implementation for the 2009 statement.
Proposal critics noted that it mostly was kept hidden from the public for the first month of the consideration process, which started with an ACLI letter sent Nov. 11, 2008.
The NAIC working group hearing on the proposal held Tuesday drew 150 participants. The executive committee session, held via conference call, attracted more than 300 participants, including many state lawmakers.
During the call, a number of commissioners, including Joel Ario of Pennsylvania and Scott Richardson of South Carolina, said they had contacted companies in their states. Those companies had said that, while it would be of benefit to have freer access to capital, there was no emergency.
“[We have] a very good financial oversight system,” Wisconsin Insurance Commissioner Sean Dilweg said during the call. “The NAIC is a huge collector of data, and there is not an emergency.” To the extent that there is, it can be addressed on a company-by-company basis, Dilweg said.