Major regulatory efforts designed to align state-based regulation with global solvency initiatives were discussed during the winter meeting of the National Association of Insurance Commissioners here.
The NAIC adopted a controversial deferred-tax asset proposal designed to give temporary capital relief to life insurers during its plenary session here. The vote was 33-22.
Among the projects that were reviewed by the NAIC, Kansas City, Mo., on December 6 were the next steps to be taken on amendments to the Suitability in Annuities Transactions model regulation. During the Life Insurance and Annuities “A” Committee meeting, Connecticut Insurance Commissioner Tom Sullivan, chair of the “A” Committee, said that comments would continue to be received through December 14 and a December 18 conference call would be held to vote on the amended model. Sullivan clarified that no substantive changes would be considered. Susan Voss, Iowa insurance commissioner and NAIC president-elect, said that the process would be completely open.
During the same meeting, Larry Bruning, chief actuary with the Kansas Insurance department and chair of the Life and Health Actuarial Task Force, detailed the need for a time extension to work on the Valuation Manual, the roadmap for implementing an amended Standard Valuation Law that was adopted during the fall national meeting at National Harbord, Md.
Bruning explained that much of the work of the Valuation Manual was done including the following components: VM 0, the table of contents; VM 1, the definition section; VM 21, addressing variable annuities; VM 26, addressing credit life and disability insurance; and, VM 30, addressing an Actuarial Opinion and Memorandum.
What still needs work, he told the “A” Committee, is VM 20, which addresses life insurance. The reason, it still needs work, according to Bruning, is that the American Council of Life Insurers, Washington, has asked for a net premium valuation approach to address any concerns of the Treasury Department so that life insurers could continue to get deductions for changes in reserves. The time is also needed, Bruning continued, to put a formulaic floor in place. The ACLI has indicated that its work would be completed no later than mid-year 2010, he added.
Wisconsin Commissioner Sean Dilweg said that it was “troubling” to see the project delayed and a promise to have it done by year-end not met. The SVL was adopted on the condition that the Valuation Manual would be completed by year-end and that both would be brought to state legislatures as a package.
Paul Graham of the ACLI, urged regulators to give the project more time because life insurance was not yet a part of the manual. An extra six months, he said, would give regulators time to ready the manual for the 2011 legislative session.
After hearing testimony, the “A” Committee granted an extension that would be no later than the summer national meeting in August 2010.
With regard to international work, updates on efforts of the International Association of Insurance Supervisors, Basel, Switzerland, and the Solvency Modernization Initiative Task Force. The updates were provided during the International Insurance Relations “G” Committee.
Attendees at the session, including Dave Snyder of the American Insurance Association, Washington, said that the work needs to be a balance of preparing for global changes to the solvency framework and a need to avoid overregulation that is really banking oversight. “We need to be careful not to be swept into regulations that are not appropriate for insurance. The crisis was really a banking crisis.”
During the meeting California Insurance Commissioner, Steve Poizner, detailed a new regulation that would prevent insurers from having indirect investment in Iran. Federal law already bans direct investment. The new requirements had many attendees wondering how you define an indirect investment. For instance, several attendees wondered if there is an investment in a company’s bonds and that company had an investment in a company that did business in Iran, would that fall under the new requirement? And a couple of attendees said that they wondered how the new requirement would mesh with existing requirements of the Securities and Exchange Commission, Washington.