NAIC President Kevin McCarty highlighted the organization’s priority items during the NAIC’s opening reception of its Spring National meeting here in New Orleans, including among them settling the matter of Actuarial Guideline 38, finishing the principles-based reporting (PBR) platform ready for state legislatures next year and group insurance supervision.
He did so by listing the priorities of the “alphabet” parent committees, known by letters A through G.
McCarty also hilighted both about the group’s work towards standard-setting both domestically and internationally to underscore these priorities.
“The resolve of our leadership team and governing board is to set concrete deliverables to ensure the NAIC as the continues to be the standard setting agency to reform and model our domestic regulatory system, but moreover promote leadership and structure for global standard setting, for the benefit of our consumers and to promote a stable insurance market,” the Florida insurance commissioner said.
Without further ado, here are the ABCs of the NAIC’s priority items for this year:
A Life and Annuity (A) Committee: tackling the goal of finalizing the bifurcated approach to handling the interpretation issues surrounding AG 38. This is also being done under the auspices of the Financial Condition (E) Committee, as well, in a joint working group.
B The Health Insurance and Managed Care (B )Committee priorities center around exchanges. The Exchanges Subgroup will continue to review proposed federal regulations and craft comments; provide input to HHS as regulations are developed; assist states that choose to develop their own Exchange or partner with the federal exchange; and draft model regulation based on the final federal regulations, McCarty said.
C The Property and Casualty (C)Committee priority, according to McCarty’s speech, is to develop a National Flood Insurance Handbook for insurance regulators. “This resource is expected to serve as a guide to help regulators better understand the NFIP, the role of write-your-own insurers, coverage nuances, pricing, programs and limits,” he stated.
D The Market Conduct and Consumer Affairs (D) Committee priority will continue to be the Market Conduct Annual Statement—or MCAS—will continue to be a D Committee priority. The NAIC is undertaking a review use of MCAS data for national analysis and interstate collaboration and what, if any, MCAS data should be shared with the public.
E The Financial Condition (E) Committee priority is developing a model act that will enable implementation of ORSA [the Own Risk and Solvency Assessment process] reporting by insurance groups. ORSA is a domestic U.S. effort to enhance group supervision as part of the NAIC Solvency Modernization Initiative.
“The enhanced process will ensure that U.S. insurers are even more thoughtful and clear in how they identify, quantify and manage risk. As regulators, this will allow us to be even more confident in the information provided to judge capital adequacy,” McCarty said.
The E Committee, with the A Committee’s Life Actuarial Task Force (LATF), is also very busy with PBR, with commissioners telling state staff to finish up work on the impact study. The NAIC hopes to complete work on PBR and have adoption now pushed to the late fall meeting, so PBR can be presented to the state legislatures –42 states are needed –in 2013 for passage.
Tennessee Insurance Commissioner Julie Mix McPeak, the vice chair of the PBR Working Group of the E Committee stated that work has been substantial and the regulators are in the “red zone “and “closing in,” and that, as she told LATF Thursday morning here in directing the group to wrap things up, the valuation manual won’t be perfect in all in all respects, but she is very encouraged it will be able to move forward and adopt PBR this year.
An outstanding issue is the net premium reserve valuation, which the American Council of Life Insurers hopes to hammer out with LATF in April for a June deadline for exposure and consideration.
F The Financial Regulation Standards and Accreditation (F) Committee, with the E Committee, is working to assist states with amending credit for reinsurance laws—and to make decisions about whether reduced collateral requirements are acceptable for accreditation purposes.
G Finally, the International Insurance Relations (G ) Committee plans to elevate engagement in public dialogue with industry and consumer representatives about international insurance issues. G-Committee, also known affectionately as “global,” has arguably the most moving parts, and includes work done with the International Association of Insurance Supervisors in Basel, the Treasury’s Federal Insurance Office (FIO) and the federal Financial Stability Oversight Council (FSOC), which has one insurance expert as a voting member of its body.
“One asset the FIO offers is its role as a conduit for regulators in negotiating international agreements, which is important as our work increasingly becomes multi-jurisdictional,” McCarty noted.
He pointed to the NAIC’s “great relationship with our former [Illiniois insurance director] colleague Mike McRaith,” and added, and “once we have established processes and procedures that allow us to better integrate the role of the FIO with the NAIC and the state regulatory system, we’ll be in a better position going forward,” referring to a number of issues.
“For example, we are working on strengthening the supervision of internationally active insurance groups – or IAIGs. We’re also engaged with the International Association of Insurance Supervisors (IAIS) on the implementation of the Insurance Core Principles as well as strengthening our professional secrecy and data-sharing agreements,” he stated.