State insurance regulators’ own systemic risk team hopes to improve U.S. care for sick, dying and dead U.S. insurers, to show that insurance regulators are doing their part to manage systemic risk.
The Financial Stability Task Force, a top-level arm of the National Association of Insurance Commissioners, has asked another arm the Receivership and Insolvency Task Force (RITF), to look at the current rules and procedures for tending to ailing insurers.
Kristine Maurer, the New Jersey state insurance regulator who heads the RITF team, began organizing the review earlier this week, at the NAIC’s spring national meeting in Milwaukee.
Regulators refer to helping a troubled insurer recover as “recovery,” and shutting down a troubled insurer as “resolution.”
At the spring meeting, Maurer asked for volunteers to help update NAIC recovery and resolution laws, procedures, and handbooks, to reflect how regulators in Washington and in other countries do things today.
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The volunteers will also look for conflicts between state and federal laws and the U.S. Treasury Department’s ideas about “orderly liquidation authority.” “Orderly liquidation authority” could let the Treasury Department take charge of a troubled insurer if the department thought state insurance regulators were failing to do enough to protect the financial system.
The NAIC has made improving the Financial Stability Task Force part of a new strategic plan.
The NAIC is a group for insurance regulators. It cannot set state insurance laws and regulations itself, but states often start with NAIC “models,” or official examples, when developing their own laws and regulations.
The NAIC began a wave of solvency model updates after the Great Recession.
Officials at the Financial Stability Oversight Council (FSOC), the International Association of Insurance Supervisors and the Financial Stability Board began systemic risk management initiatives of their own around the same time.
FSOC helps federal regulators track potential threats to the U.S. financial system.
The Financial Stability Board is the Basel, Switzerland-based equivalent of FSOC for Europe.
The International Association of Insurance Commissioners is a Basel-based group for the world’s insurance regulators.