NAIC 2016 Fall National Meeting Highlights
The NAIC’s 2016 Fall National Meeting was held in a not-so-sunny Miami from December 9 to 12. Below is a summary of key topics discussed at the meeting.
“All we are saying…”
It’s not often that John Lennon is quoted during NAIC discussions but an Interested Party referred to the Beatles’ hit single while asking the Reinsurance Task Force to “give peace a chance” by not reacting too quickly to the latest actions of E.U. reinsurers. Interested Parties expressed support for covered agreement negotiations as the best hope to avoid an international trade war within the reinsurance sector. In recent months, Germany, the United Kingdom, France, and Ireland have interpreted and implemented Solvency II in a manner that harms or may harm U.S. domiciled reinsurers. The Task Force discussed whether the actions of these nations constitute a “material change in a supervisory system” that could result in retaliatory U.S. action such as revoking Qualified Jurisdiction status. Such an action would increase collateral requirements for reinsurers domiciled in the offending nation. Federal Insurance Office Director Michael McRaith spoke earlier in the day to reassure regulators that an announcement on covered agreement negotiations would occur before year-end 2016. An agreement was finally announced on Jan 13. Review the fact sheet.
Math at 8 AM? Where’s my coffee?
The Group Capital Calculation Working Group began its meeting with a riveting math lesson on alternative options for the calculation of scalars for groups that include non-US insurers. Scalars address the issue of comparability between the accounting systems and capital requirements of jurisdictions. The Working Group exposed a memo that presents two options and had a 45-day comment period that ended January 24, 2017.
Are we there yet?
The Cybersecurity Task Force meeting hosted another standing room only crowd. In addition to an update on Federal cybersecurity legislation, the Task Force received a report on the latest revisions to the draft Insurance Data Security Model Law. Bi-weekly conference calls will continue into 2017 as the drafting group addresses:
- State uniformity and exclusivity of the law
- Whether a “harm trigger” is required for an incident to be considered a data breach
- Oversight of third-party service providers
- Various other topics in Sections 2 and 3 of the Model Law
Haven’t we had enough debating in 2016?
The Group Solvency Issues Working Group meeting included a heated debate over the exposed draft of the Form F Guidance Manual, which is intended to provide non-authoritative guidance on Form F preparation. Some suggestions included renaming the document to Interpretation Guide or Best Practices Guide. Concerns were raised regarding the flexibility of information to be provided versus a fill-in-the-blank approach. Interested parties strongly recommended not expanding the scope of Form F beyond the original intent and avoiding references to ORSA and enterprise-wide ERM. Regulators will reconvene on this matter in January.