The Financial Regulation Standards and Accreditation (F) Committee (the “Committee”) Spring NAIC Meeting addressed a number of pertinent topics; however, the majority of debate and comments centered around the definition of “Multi-State Insurer” for accreditation purposes. Committee members discussed a new proposal released last week that would amend the definition of “Multi-State Insurer” within the NAIC Model Act to include certain types of reinsurers. Some industry participants expressed fear that including certain captive reinsurers within the definition of Multi-State Insurer would contract the domestic captive insurance sector and push such reinsurers offshore. Proponents of the amendment to the definition believe this would not occur, and that most captives would not be captured under the change, including captives owned by non-insurance companies. Such proponents also noted that the proposed amendment would not impact any adoption of Rector Report recommendations, which we have discussed in further detail here
A few state insurance commissioners weighed in on the potential amendment, as well as various industry participants and regulators. Commissioner Leonardi of Connecticut noted that while the issue needed to be addressed, he did not believe this process should be expedited, and that more thought should be put into the consequences of including certain reinsurers within the definition of Multi-State Insurer. Superintendent Lawsky of New York and Commissioner Torti of Rhode Island believed that the NAIC needed to move with relative haste on the issue, with Mr. Lawsky hoping that the NAIC would take “months instead of years” to address such concerns. Representatives of The American Council of Life Insurers strongly disagreed with the proposal, claiming that it put a “moratorium on new captive transactions.” A motion was then passed to expose the proposal to a 45-day comment period. We have earlier reported on the NAIC’s involvement on this issue here
Other issues addressed included (i) the adoptions to NAIC publications, including updates to the Examiner’s Handbook relating to critical risk categories and IT review, (ii) declaring that the NAIC 2014 Summer Meeting will consider adopting comments to the Model Risk Retention Act, and (iii) referring the model law with respect to port-of-entry statutes to the Financial Condition (E) Committee for review and potential update.