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Meeting coverage.

IN ORDER TO "PROVE ONCE AGAIN THAT the time-honored system of state insurance regulation is strong and growing stronger," National Association of Insurance Commissioners President William H. McCartney proudly opened the Summer National Meeting in Washington, D.C., with the presentation of the latest group of states to receive NAIC accreditation.

The states - Colorado, Minnesota, North Dakota and Virginia -joined nine others certified under the twoyear-old program, which recognizes that each state insurance department has met stringent financial regulation standards designed to strengthen its ability to monitor the solvency of insurance companies. Mr. McCartney further reported that the NAIC remains on track toward its "goal of certifying a substantial majority by January 1, 1994."

Further bolstering the NAIC's case against federal regulation was the report presented by U.S. Treasury Department Deputy Assistant Secretary John C. Dugan. Citing the consequences of failure of the federal deposit insurance scheme, Mr. Dugan declared that the U.S. Treasury Department does not think "that now is the time to move forward with a federal legislative regulatory scheme, particularly one that involves a federally guaranteed fund for policyholders." Mr. Dugan believes that the aggressive NAIC accreditation program is appropriate, and changes being instituted by the NAIC "should be given time to work before Congress moves forward with a full blown comprehensive legislative scheme to regulate the insurance industry at the federal level."

The globalization of insurance was more evident at this meeting than at previous ones. Sir John W. Swan, premier of Bermuda, addressed the opening session, while John Darwood from the NAIC noted in his report to the International Insurance Relations Task Force the presence of some 55 foreign delegates, including representatives from the European Community and the Organization for Economic Cooperation and Development. He also reported that the task force was now considering "the formation of an International Association of Insurance Supervisors" whose universe at present would encompass some 220 jurisdictions. "At this time next year I believe an association will be up and running."

The NAIC's Reinsurance Task

Force held off recommending the adoption of the latest version of the Limitations on Reinsurance Activities of Insurers Model Act (fronting bill) that would place new restrictions on the practice of fronting. This was done as a resuit of an outpouring of serious concern and opposition expressed by various industry groups. Regarding the proposed fronting bill, New York Insurance Superintendent Salvatore Curiale stated, "I think we all agree that something needs to be done. You tell us how to do it." Paul Brown, RIMS director of government and public affairs and general counsel, expressed his encouragement from Mr. Curiale's statement, noting that "this was the first time the New York Insurance Department ever showed any willingness to open itself up to comments from the industry."

It has also been learned recently that a new working group charged with drafting a model fronting bill from scratch is to be chaired by Georgia Insurance Commissioner Tim Ryles, who has in the past, Mr. Brown reports, "shown a dislike for the approach taken by the original working group. His views seem much more in line with those of RIMS and other industry representatives." The task force expressed the hope of having a final draft ready for adoption at the September meeting.

The Workers' Compensation Task Force unanimously adopted a resolution introduced by North Carolina Insurance Commissioner Jim Long. The resolution noted that the NAIC "recognizes the serious nature of problems in the workers' compensation insurance market and encourages the urgent consideration of state strategies that have proven successful or new initiatives that address these problems and develop support for effective solutions. "A call to industry to aid the task force in promoting the concept of 24-hour coverage was later made by Gary K. Weeks, Oregon Insurance Department commissioner. The task force would accept presentations at the September meeting in Cincinnati.

Two NAIC subgroups reported that the proposed riskbased capital formulas for both life and property and casualty insurers were "currently in the process of being tested." These formulas would be used to calculate and report each insurer's required capital, which would then be included in the company's annual statement. Both groups were aiming to present their results in December.
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Title Annotation:National Assn. of Insurance Commissioners
Author:Kurland, Orin M.
Publication:Risk Management
Date:Aug 1, 1992
Words:703
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