Insurance Commissioner Adam Hamm of North Dakota will be leading the National Association of Insurance Commissioners (NAIC) in 2014 with a focus on what’s in front of him, he says, not what’s in the “rear-view mirror.”
Joining Hamm in leadership will be Commissioner Sharon Clark of Kentucky as secretary-treasurer. Julie Mix McPeak of Tennessee and Wayne Goodwin of North Carolina were also up for the position. NAIC President Jim Donelon is exiting — although he will still be part of the leadership as immediate past president.
Donelon also revealed that during his time at the helm he has struggled with prostate cancer and undergone 39 days of radiation in late summer and fall. Donelon awaits news on remission now that his treatment is complete and feels well enough to run for re-election in Louisiana if he can.
Hamm, in a press conference with reporters after the conclusion of the meeting, says he really doesn’t think he is in a difficult position, is looking forward to focusing on the work before him, and using the tools of collaborative and consensus building he has formed over his career as a federal prosecutor and now as an elected insurance commissioner from North Dakota.
What’s in front of him first and foremost, he says, is the implementation of the Patient Protection and Affordable Care Act (PPACA) with forms and enrollment issues. Add to that, the clarion call from multiple quarters for more transparency for captive reinsurance transactions by life companies and a full plate of federal and international regulatory oversight issues — not to mention an organization that some say has to heal its family rift over its own publicly-exposed corporate governance issues.
Regarding the drama at the Washington NAIC Winter meeting, “I have seen these things come and go — we have been strong for 150 years and will continue to be strong for another 150. We are a family, and there are disagreements within the family,” Hamm said.
Connecticut Insurance Commissioner Tom Leonardi fought to push for an outside consultant to review the NAIC’s corporate governance after what he felt were egregious decisions by members and various executive committee regulators to divide and undermine the mission and the good name of the NAIC.
Although Leonardi’s motion to hire an outside consultant immediately was rejected and debate shut down, Hamm said it will be discussed by the ad hoc committee on corporate governance manned by Missouri Insurance Director John Huff. If a recommendation comes before the executive committee at the February commissioners retreat in Arizona, they will vote on the recommendation.
Hamm said the decision to not attend the PPACA meeting with President Obama was the lack of consensus on a full discussion by the body and a general lack of consensus on the agenda. Pennsylvania Insurance Commissioner Michael Consedine, now incoming NAIC vice president, said “it was never about spurning an invitation to meet with the president.” He said the NAIC is a process-oriented body and they had to approach a meeting with the president with some sensitivity.
Hamm is also looking forward to continued dialogue with the FIO, the Federal Reserve, U.S. Treasury and global supervisory and association counterparts in the coming year.
Although the NAIC has not formulated a response to the FIO report on its more specific recommendations, Hamm identified a couple of his own issues with a report that on whole, he said, has a “balanced nature.”
The first, which he raised during the meeting with Treasury Secretary Jacob Lew on Tuesday, Dec. 17, was the call for federal oversight of most aspects of mortgage insurance (states will still be able to collect premiums.)
Hamm said there would be “much more dialogue with Treasury and with FIO on that.”
“The other thing that immediately jumped out at me was the section on supervisory colleges, Hamm said. NAIC leadership has said before, but feels it bears repeating, that “FIO is not a regulator,” and the supervisory colleges, which are chock full of sensitive information and company data, are not usually a place for nonregulators.
Hamm said he wanted to drill down on the FIO report’s use of the word “engage” about its intended involvement in the colleges. “It is not just an issue for us but an issue for the Europeans as well,” said Consedine, who serves on multiple supervisory colleges.
“I think there can be a way forward that we can find,” Hamm said.
With regard to inclusion at top levels of global supervision discussions, the state regulators want a seat at the table. The global Financial Stability Board (FSB), except for the International Association of Insurance Supervisors Secretary-General Yoshi Kawai, doesn’t really have a strictly defined insurance person in its ranks, and this concern was also raised with Lew yesterday.
The FSB has an increasing role internationally on insurance, Hamm agreed. “It is a concern we don’t have a voice on that body. I guarantee that will have more discussion on in 2014.” Hamm added that the NAIC isn’t where it wants to be with Lew on FSB yet, but we “put it on his radar screen.”
Also expected is more work on captives and their transparency issues in 2014 as federal agencies and states call for more disclosure at the state and interstate level about transactions to offload life insurance reserves for products seen as requiring too high a level of reserving. The principles-based reserving implementation will be folding this into its work this year. Just yesterday, the Treasury’s Office of Financial Research discussed gaps in financial data with regard to the growing captives market as cause for concern in market stability.