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December 22, 2008 Monday 04:25 PM EST
430 words
NAIC Group Prepares 'Quick' Decision on Life Insurers' Request
Sean P Carr
KANSAS CITY, Mo.
A special National Association of Insurance Commissioners working group will accept written comments on proposals to ease capital reserve requirements for life insurers through Dec. 26 in advance of a conference call meeting several days later.
The Capital and Surplus Relief Working Group has posted on the NAIC Web site reports from four technical sub-groups that evaluated the nine proposals from the American Council of Life Insurers. The ACLI developed the proposals in an effort to help life insurers meet required reserve levels amid falling stock prices and a difficult economic climate for many of its member companies. The suggested changes would address four areas: life insurance reserves; annuity reserves and risk-based capital; risk-based capital for investments; and accounting for deferred tax assets.
District of Columbia Insurance Commissioner Thomas Hampton, leader of the working group, said commissioners will meet via conference call, likely on Dec. 29 or Dec. 30, in order to finalize the proposals for submission to the NAIC Executive Committee. The final document could be approved by the executive committee by the first week of January, he said.
"It's going to be quick," Hampton said.
In order to facilitate quick action in the states, the final document would take the form of guidelines that each insurance commissioner can follow, Hampton said. Commissioners, by and large, would be able to use their discretionary authority to authorize "a deviation from prescribed accounting and reporting practices, he said.
"As long as they do it with the guidelines, it's an acceptable way," Hampton said.
In their preliminary reports to the working group, the technical bodies approved four of the ACLI proposals (with comments), offered alternate versions of two others, and outright rejected three. Those approved would affect mortality tables and would facilitate commissioners' discretion for allowable collateral for reinsurance, among other changes. Proposals where alternates were suggested would affect stand-alone asset adequacy and following of GAAP rules.
In a statement, ACLI Senior Vice President of State Relations Bruce Ferguson said, "Clearly, the regulators are giving serious consideration to regulatory changes that are prudent in today's market environment while still maintaining important consumer protections. We are in the process of evaluating the substance and impact of the NAIC's preliminary recommendations and will submit formal comments by the Dec. 26 deadline."
(By Sean P. Carr, senior associate editor, BestWeek: Sean.Carr@ambest.com)
December 23, 2008
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