NAIC Spring National Meeting
April saw the official NAIC Spring Meeting take place. It was another virtual meeting. The meeting occurred over several days, April 7 to 9 and April 12 to 14. The groups that met during the official meeting time period consisted of the standing committees, some of those committees’ direct-report subgroups, special topic groups, the Executive Committee and the joint Executive/Plenary meeting. Most of the task forces and working groups met in March and were included in BKD’s March 2021 NAIC-Related Activity article. The NAIC has not posted meeting minutes for most of the below groups yet, but that should happen in the next couple of weeks.
Here is some of the activity that took place.
NAIC Consumer Liaison Committee – April 8, 2021
In case you are not familiar with this group, its webpage indicates its goal is to “assist the NAIC in its mission to support state insurance regulation by providing consumer views on insurance regulatory issues.” The Committee provides an opportunity for discussion between NAIC members and NAIC consumer representatives. Currently, there are 20 consumer liaison representatives representing a wide variety of consumer organizations. The group heard six different presentations during this meeting. The presentations covered the following topics:
- Federal healthcare reform development and the impact on states
- Enforcement needed to ensure health plan compliance with HIV preventive drug requirements
- How commissioners can help improve maternal health outcomes
- Coverage losses among kids
- A comprehensive approach to addressing systemic racism in insurance
- Short-term and long-term recovery of Texas in the aftermath of catastrophic disaster
Innovation and Technology Task Force – April 9, 2021
The overall purpose of this group is to assist with regulator education and discussion of innovation and technology for the insurance sector. This includes monitoring technology developments that affect the insurance regulatory framework and coordinating with other NAIC groups on technology, innovation, cybersecurity issues, and data privacy. The Task Force has two working groups reporting to it, the Big Data and Artificial Intelligence Working Group and the Speed to Market Working Group, which both provided reports of their meetings, updating the Task Force on their current activities. The group discussed continuing regulatory information requests related to the needs of states during the pandemic. A new working group will be formed to address some of these issues. The group heard presentations from State Farm and USAA on their auto subrogation blockchain solution, Trellis Connect on its data sharing application, and Vero on its online risk and insurance advisor tool. Discussions included consumer data ownership issues and potential guidance. The Special Committee on Race and Insurance, Accelerated Underwriting Working Group, Property and Casualty Insurance Committee, and Privacy Protection Working Group all provided updates of their latest activities. NAIC staff provided a report on the NAIC model review process.
Long-Term Care Insurance Task Force – April 9, 2021
Long-term care is one of the NAIC’s priority issues for 2021. The Task Force exposed operational sections of the long-term care insurance multistate rate review framework draft for a 45-day comment period. A report on industry trends and possible solvency impact of long-term care insurance companies was presented. The group heard an update on the long-term care insurance restructuring initiative, including the fact that the Executive Committee has decided to refer the initiative to the Restructuring Mechanisms Working Group. An update was provided on the long-term care insurance special data call, indicating NAIC staff is working with a consultant to develop a report for the public.
Climate and Resiliency Task Force – April 9, 2021
This Task Force addresses climate-related risk and resiliency issues, providing a discussion forum for regulators, industry, and other stakeholders. The Task Force has divided its responsibilities into various workstreams. The workstreams provided reports of their activities. The Solvency Workstream indicated it reviewed the NAIC Capital Markets Bureau’s response to the International Association of Insurance Supervisors Global Insurance Market Report data call and sent a referral to the Catastrophe Risk Subgroup indicating that perhaps more perils should be added to the risk-based capital charge. The Innovation Workstream stated it heard presentations on parametric insurance, and the Technology Workstream briefly described a presentation regarding an application paper that shows how mitigation activities can reduce the risk of wildfire. Updates also were provided on the Building Code and Mitigation Workshop, NAIC climate-related communication activities, federal activities related to climate risk, and international activities related to climate risk.
Opening Session – April 12, 2021
There is no prepublished agenda for this session, so attendees are never quite sure of what will be covered. There are a few standard activities that often happen during the meeting, like the presentation of awards. There were no awards this time. The NAIC is celebrating its 150th birthday this year. Therefore, it was really no surprise that much of the meeting was spent providing a historical overview of the NAIC (at first the National Convention of Insurance Commissioners or NCIC), including a video.
As part of its birthday celebration, the NAIC introduced a new logo:
According to the NAIC, the use of the intertwined “C” is meant to emphasize the way commissioners collaborate in service of their shared mission of protecting consumers.
The NAIC president, Commissioner David Altmaier of Florida, concluded the session by reviewing the NAIC’s priorities for 2021. Those priorities are COVID-19, long-term care insurance, natural climate risk and resiliency, race and insurance, consumer data privacy, and big data/artificial intelligence.
Special Committee on Race and Insurance – April 12, 2021
Race and insurance is another one of the NAIC’s 2021 priorities. The Committee’s webpage lists the following items as its charges for 2021.
- Conduct research and analyze the level of diversity and inclusion in the insurance sector.
- Take part in discussions with a broad group of interest parties on issuers related to race, diversity, and inclusion in the insurance sector, including insurance products.
- Review current practices or existing barriers that potentially hinder people of color and/or historically underrepresented groups.
- Make recommendations by the end of the year on ways to increase diversity and inclusion, mitigate practices that provide a hinderance, and remain engaged in these issues.
The Committee had previously released more detailed goals for comment. Comment letters were received from several different organizations and were reviewed during the meeting.
The Committee has delegated work to five different workstreams, which all provided status reports during this meeting. Two of the workstreams are addressing the level of diversity and inclusion within the insurance industry, the NAIC, and the state insurance regulatory community. The other three groups are looking at practices within the industry that result in disadvantages to people of color and/or historically underrepresented groups in obtaining coverage. The three groups are divided by product lines: property/casualty, life and annuities, and health.
Financial Regulation Standards and Accreditation (F) Committee (F Committee) – April 12, 2021
The meeting opened with a brief discussion on revisions adopted in 2020 NAIC publications referencing accreditation standards. A list of those publications, which included the Accounting Practices and Procedures Manual and the various Annual Statement Blanks and Instructions, was provided. The references were insignificant for accreditation purposes, indicating the F Committee did not need to expose them for comment. The F Committee approved the listing by adopting it. The Committee exposed proposed revisions updating the XXX/AXXX Captive Reinsurance Framework references in the Term and Universal Life Insurance Reserve Financing Model Regulation for 30 days. The discussion then turned to 2020 revisions to the Insurance Holding Company System Regulatory Act and the Insurance Holding Company System Model Regulation with Reporting Forms and Instructions as an update to accreditation standards. These proposed revisions were adopted in December 2020 by the Group Capital Calculations Working Group and address addition of a group capital calculation (GCC) and a liquidity stress test. The proposals were exposed for a 30-day comment period. If adopted, both the GCC and the liquidity stress test would become accreditation standards on January 1, 2026.
Financial Condition (E) Committee – April 13, 2021
The meeting started out very uneventful as the Committee breezed through its first four agenda items, which were adopting the various meeting minutes of its task forces and working groups—there were 12 of them. Guidelines for the definition of reciprocal states were adopted for use in receivership laws, and a new subgroup, the Receiver’s Handbook Subgroup, was approved along with its current charges. The discussion then turned to nonsubstantive language changes to SSAP No. 71 – Policy Acquisition Costs and Commissions that had previously been adopted by the Statutory Accounting Principles Working Group and are now working their way up through the NAIC ladder of committees for final approval and implementation. From the beginning, this issue has been considered a controversial item and, as such, has been handled by each NAIC group “outside” of adoption of meeting minutes. Once again, a significant amount of time was spent discussing this issue, but no new information was received. Several commissioners, and a few ex-commissioners, expressed concern regarding the implementation date. In the end, however, the revisions were adopted, and the stated implementation date of December 31, 2021, was kept in place. Companies were reminded that if this language revision was going to cause solvency concerns in implementing compliance, companies should contact their domiciliary commissioner. This issue may not quite be finished. There is one more opportunity for discussion and possible changes at a Plenary meeting, which is currently scheduled to be held in August.
Executive Committee – April 14, 2021
Whereas some of the NAIC groups allow a state department of insurance to appoint members who are not commissioner-level members, the Executive Committee is commissioners only. Their membership is composed of the current NAIC officers, the most recent past president, and three members from each of the four NAIC zones. After adopting meeting minutes from its various task forces, subgroups, and special committees, the Committee adopted a request for amendments to the Nonadmitted Insurance Model Act from the C Committee; the amendments are to be completed within one year. A report was received providing 2020 information on the NAIC designation program for insurance regulators. A status report was given on the NAIC State Ahead strategic three-year plan. The Committee was brought up to date on amendments being developed by several different NAIC groups. The meeting came to a close with the reports from National Insurance Producer Registry (NIPR), an affiliate of the NAIC, and the Interstate Insurance Product Regulation Commission (Compact).
Joint Meeting of Executive Committee and Plenary – April 14, 2021
This meeting is traditionally the last session of any National Meeting. All states and U.S. territories are members of the Plenary. The meeting began with an oral report of the Executive Committee meeting that occurred earlier in the day (see above). Several sets of minutes and reports from committees, subcommittees, and task forces were then adopted. Within that action, one item was handled separately, that being considering the adoption of the Unfair Trade Practices Act (Act). Discussion of the Act ensued, with some states indicating they were voting against the new model because they felt it did not go far enough in protecting consumers. The Act was adopted, with one state abstaining and five states voting against. The next set of agenda items covered reports from the Life Insurance and Annuities (A) Committee, the Health Insurance and Managed Care (B) Committee, and the Property and Casualty Insurance (C) Committee (C Committee). Two items were handled outside of the normal C Committee report: adoption of the Real Property Lender-Placed Insurance Model Act and the Regulatory Review of Predictive Models white paper. Both items were adopted. The Market Regulation and Consumer Affairs (D) Committee report was next, with one item handled outside of the minutes. That item was amendments to the Antifraud Plan Guideline, which was adopted. The Financial Condition (E) Committee’s report was given, with the adoption of the Guideline for Administration of Large Deductible Policies in Receivership adopted separately. That was followed by the reports from the Financial Regulation Standards and Accreditation (F) Committee and the International Insurance Relations (G) Committee. An updated report on the status of state implementation of NAIC-adopted model laws and regulations was presented, and then the meeting was adjourned.
Next National Meeting
The next NAIC National Meeting is scheduled for August 14 to 17. Currently, the NAIC is still advertising the meeting as being held in Columbus, Ohio, so perhaps it will be an in-person meeting and not another virtual meeting. Time will tell. If the NAIC does decide to go virtual again, most likely the dates will change somewhat.
For more information, reach out to your BKD Trusted Advisor™ or submit the Contact Us form below.