The American Council of Life Insurers (ACLI) wants a guide state insurance regulators will use to handle failures of systemically important insurers to convey a need for quick decision making.
The Dodd-Frank Receivership Implementation Working Group at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., is developing a draft chapter on implementing a receivership for the kind of large insurer, or smaller insurer that somehow affects the solvency of other financial institutions, that could be affected by the Orderly Liquidation Authority (OLA) provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
The Dodd-Frank Act gives federal reglators the authority to determine whether an insurer is systemically important.
If federal regulators decide that a systemically important insurer is distressed, the Dodd-Frank Act will give regulators in the distressed insurer’s state of domicile, or official home state, 60 days to resolve the insurer’s problems. If the state regulators do not resolve the insurer within 60 days, the Federal Deposit Insurance Corp. (FDIC) can step in and resolve the insurer using the state of domicile’s insolvency laws.
What Your Peers Are Reading
The Dodd-Frank receivership working group is drafting a new Dodd-Frank Act chapter for the NAIC’s Receiver’s Handbook for Insurance Company Insolvencies.
The table of contents for the current version includes topics such as the state-level process for prompt initiation of state insurance receivership, the need to analyze what could go wrong and how to handle various types of emergencies before a crisis occurs, procedures for consulting promptly with a state’s attorney general or other stakeholders, and issues involving an insurer’s subsidiaries and affiliates.
One flow chart in the draft illustrates the steps for initiating orderly liquidation proceedings under the Dodd-Frank Act.
Another chart illustrates how a state would go about initiating the receivership process.