12 - National Association of Insurance Commissioners Activity
Each year, the Division of Insurance participates in a range of activities through the National Association of Insurance Commissioners (NAIC). The ability to combine information, perspective and expertise with our counterparts in other states is vital to the Division's ability to accomplish our mission. Linkages and information-sharing from state to state take place as the NAIC committees work via email, webinars and conference calls throughout the year. In addition, staff from the Division attend NAIC meetings regularly.
Property and Casualty Insurance (C) Committee
The mission of the Property and Casualty Insurance (C) Committee is to monitor and respond to regulatory issues associated with property or casualty insurance products, including issues regarding their delivery and cost. The Committee monitors property and casualty insurance markets and the surplus lines market. The Committee addresses regulatory issues associated with both personal lines (particularly auto and homeowners insurance) and commercial lines coverages. The Committee also monitors and responds to problems associated with financial reporting matters for property and casualty insurers that are of interest to regulatory actuaries and analysts and monitors and responds to problems associated with the financial aspects of the surplus lines market.
The Committee has four task forces that report to it and has appointed eight working groups to assist it with its deliberations. The task forces address actuarial matters of interest to regulatory casualty actuaries, information related to statistical reporting by property and casualty insurers, issues in the surplus lines markets and workers' compensation insurance regulatory issues. The working groups:
- Develop examination protocols for advisory organizations
- Deal with various aspects of disasters, both natural and acts of terrorism
- Addressing regulatory concerns about encroachment into regulatory processes by courts through class action litigation
- Coordinate with federal crop insurance regulators with regard to the delivery of crop insurance products to the nation's farmers
- Monitor developments related to risk retention groups, particularly related to corporate governance and ownership
- Monitor issues related to the delivery of title insurance products
- Assist in the development of uninsured motorist verification systems
Market Conduct and Consumer Affairs (D) Committee
The (D) Committee monitors aspects impacting the market regulatory process. This monitoring includes overseeing:
- The collection of market data
- Market Information Systems
- Automated applications
- The use of desk audits, examinations, investigations, and other resources for monitoring market activities
- The analysis of data relevant to market issues
In addition, the (D) Committee helps identify and develop uniform regulatory standards and solutions to problems related to market issues. As part of this function, the committee facilitates interstate communication and coordinates collaborative state regulatory actions. The committee also reviews and makes recommendations regarding the underwriting and market practices of insurers and producers as those practices affect insurance consumers, including availability and affordability of insurance.
Market Analysis Procedures Working Group (D)
The Director of Market Conduct is an active member of the (D) Committee's Market Analysis Procedures Working Group, which provides a national forum in which states can share and coordinate their market analysis programs. The Working Group also develops procedures for uniform nationwide market analysis using their adopted Framework for Market Analysis.
Market Actions Working Group (D)
The Director of Market Conduct is also an active member of the (D) Committee's Market Actions Working Group, which focuses on the following:
- Reviewing insurance companies identified with a current or potential market regulatory issue of national concern
- Reviewing insurance companies or issues that reach a certain mass of regulatory activity or interest
- Initiating and facilitating efficient regulatory collaboration among states to reduce duplicative regulatory efforts
- Providing guidance to ensure appropriate regulatory actions are taken against companies and individuals to adequately address market issues
Producer Licensing Working Group (D)
The Director of Producer Licensing is an active member of the (D) Committee's Producer Licensing Working Group. The Working Group's mission is to:
- Develop and implement uniform standards, interpretations and treatment of producer and adjuster licensees and licensing terminology
- Coordinate and consult with the National Insurance Producer Registry Board of Directors to develop and implement uniform producer licensing initiatives, with a primary emphasis on encouraging the use of electronic technology
- Monitor and respond to developments related to licensing reciprocity
As a member of the Working Group, the Director participates in regional and national SILA (Securities Insurance Licensing Administrators) meetings and occasional NAIC meetings. Participation in Working Group conference calls is ongoing throughout the year.
Financial Conditions (E) Committee
The mission of the Financial Condition (E) Committee is to be the central forum and coordinator of solvency-related considerations of the NAIC relating to accounting practices and procedures, blanks, valuation of securities, the Insurance Regulatory Information System (IRIS), financial analysis and solvency, zone examinations and examiner training and issues concerning insurer insolvencies and guarantees.
Reinsurance Task Force (E)
The mission of the Reinsurance (E) Task Force is to monitor and coordinate reinsurance activities and areas of interest, which overlap to some extent the charges of other working groups, specifically the International Insurance Issues (G) Committee. This includes:
- Provide a forum for the consideration of reinsurance-related issues of public policy
- Promote and facilitate the implementation of the adopted reinsurance regulatory modernization framework
- Monitor the activities of the Property and Casualty Reinsurance (E) Study Group for matters that should be considered by the Task Force
- Monitor the development of international reinsurance standards
Receivership and Insolvency Task Force (E)
The Division served as a member of the Receivership and Insolvency Task Force of the NAIC during 2009. The primary mission of this Task Force is to monitor insolvencies of insurance companies and insolvency guarantee funds nationwide. The duties associated with this group include:
- Monitoring the effectiveness and performance of state administration of receiverships and the state guaranty fund system
- Coordinating cooperation and communication among regulators, receivers and guaranty funds
- Monitoring ongoing receiverships and reporting on such receiverships to NAIC members
- Developing and providing educational and training programs in the area of insurer insolvencies and insolvency guarantees to regulators, professionals and consumers
- Developing and monitoring relevant model laws, guidelines and products
- Providing resources for regulators and professionals to promote efficient operations of receiverships and guaranty funds
Attorneys in the Legal Division represented the Commissioner of Insurance as a member of the Receivership Model Act Revision Working Group of the Receivership and Insolvency (E) Task Force.
Financial Analysis Working Group (E)
The Division also served as a member of the Financial Analysis Working Group during 2009. This group is a subgroup of the Financial Conditions (E) Committee. The mission of the Working Group is to:
- Analyze nationally significant insurers and groups that exhibit characteristics of trending toward or being financially troubled, and determine if appropriate action is being taken
- Interact with domiciliary regulators and lead states to assist and advise as to what may be the most appropriate regulatory strategies or action(s)
- Support, encourage, promote and coordinate multi-state efforts in addressing solvency problems
- Review and make appropriate updates and enhancements to the NAIC Troubled Insurance Company Handbook
Accounting Practices and Procedures Task Force (E)
The Division served as a member of the Accounting Practices and Procedures Task Force during 2009. This task force is a subgroup of the Financial Conditions (E) Committee. The mission of the Task Force is to:
- Identify, investigate and develop solutions to accounting problems with the goal of guiding insurers in properly accounting for various aspects of their operations
- Modify the Accounting Practices and Procedures manuals to reflect changes necessitated by task force action
- Study innovative insurer accounting practices which affect the ability of regulators to determine the true financial condition of insurers
The group accomplishes this mission through various working groups, sub groups, and study groups: Emerging Accounting Issues Working Group, Statutory Accounting Principles Working Group, Separate Accounts Subgroup, Property and Casualty Reinsurance Study Group, International Accounting Standards Working Group, Blanks Working Group, etc. To facilitate their objectives, these groups hold numerous conference calls annually and meet at all of the national meetings. There were substantive revisions to SSAP 91R, SSAP 98, and SSAP 99 as well as lots of non-substantive revisions to other SSAP's during 2008 and 2009.
Interstate Insurance Product Regulation Commission
In 2000, members of the NAIC unanimously adopted a blueprint for significant regulatory reforms to modernize state insurance regulation. The NAIC formed the Speed to Market Working Group (EX) to address regulatory efficiency issues as insurers facing competition from financial institutions sought a more effective filing and review process. The Working Group recommended a new system featuring:
- A single point of filing and review
- The development of national standards for insurance products
- A more efficient state-based procedure for processing and filing
In 2002, NAIC members decided that the facilitation of interstate cooperation and the development of national uniform standards applicable in multiple states would best be served by an interstate compact. Throughout 2002 and 2003, the working group worked closely the National Conference of State Legislatures (NCSL), the National Conference of Insurance Legislators (NCOIL), the National Association of Attorneys General (NAAG), and other state officials to further refine and enhance the Interstate Insurance Compact Model legislation. By May of 2006, more than 26 states with over 40% of the nationwide premium volume had enacted the Compact legislation. This threshold created the Interstate Insurance Product Regulation Commission (IIPRC), thereby establishing a central point for filing various insurance products. In August of 2006, the Governor signed Chapter 223 of the Acts of 2006, allowing Massachusetts to join the Compact
Within six months of its creation, the IIPRC adopted its first Uniform Standards. In the spring of 2008, experienced regulators and actuaries joined the IIPRC staff. Annual registration fees were instituted and collected from companies filing with the IIPRC and the Commission adopted a code of ethics. In the summer and fall of 2008, additional states joined the Compact, bringing the premium volume represented to more than 50% of the premium volume nationwide. Additional uniform standards were developed and adopted, bringing the total number of standards to 46 by the end of 2008. Work continues to adopt more Uniform Standards and to enhance the procedures to receive product filings on behalf of the IIPRC Member States.
Today, the IIPRC has 35 members - including Massachusetts - representing half of the nationwide premium volume. The Interstate Insurance Compact is an important modernization initiative that benefits state insurance regulators, consumers and the insurance industry. The Compact enhances the efficiency and effectiveness of the review and approval of insurance filings, allowing consumers to have faster access to competitive insurance products. The Compact promotes uniformity through the application of national product standards embedded with strong consumer protections. The IIPRC continues to adopt additional uniform standards, outreach to more states to join the Compact, and encourage insurers to utilize the IIPRC central point of product filing
In addition to serving as a member of the Compact, Massachusetts serves on the Management and Communications Committees and participates on the Product Standards and Rulemaking Committees.