How did you spend your summer vacation? I was in Atlanta in august with the 50 state insurance commissioners, hundreds of insurance regulators and NAIC staff, and seemingly thousands of lawyers. Surprisingly, it wasn’t bad.
The NAIC’s summer meeting is a humdrum affair, as committees plod through their work trying to complete projects by year’s end. You had to endure plenty of insurance-regulatory minutiae, though not too much to take your mind off the beach. For brokers, however, there was some genuinely interesting action…
TERRI VAUGHN Topping the list was the announcement of the resignation of Terri Vaughan, who has served as CEO of the NAIC since early 2009. Terri has served as Iowa insurance commissioner, NAIC president, a Drake University professor and generally all-around brilliant insurance academic.
During her time at the NAIC, she served as the face of the organization in Washington and internationally, focused largely on financial and solvency matters. Many say her expertise was a huge asset to the NAIC and state regulators during the financial crisis.
Terri served as chair of the Joint Forum, a Basel-based group of banking, insurance and securities supervisors created to address cross-sectoral and financial conglomerate issues. She was also a member of the executive committee of the International Association of Insurance Supervisors, as well as one of the lead U.S. negotiators with the E.U. on solvency issues.
Terri plans to leave the NAINAICC in February. The NAIC said it would conduct a comprehensive search for her replacement, which only ginned up the rumor mill.
Perhaps Terri will follow the lead of a number of her fellow former state regulators and move to the federal government. Several former commissioners were in Atlanta representing their new federal employers, including Mike McRaith, a former Illinois insurance director now serving as director of the Federal Insurance Office.
REFORM ON ICE Although the federal office has drafted a report to Congress on insurance regulation and reform, its release has been stalled for months with no explanation (election-year politics is the likely culprit). With the report on ice, McRaith has focused on international matters, especially financial and solvency regulatory efforts at the IAIS and the E.U. That was likely the topic of his discussion with the state regulators.
The week before the NAIC meeting, McRaith convened a meeting of the Federal Advisory Committee on Insurance (chaired by Marsh CEO Brian Duperreault) to discuss international issues.
Among his roles, McRaith, serves as the International Association of Insurance Supervisors executive. The organization is drafting a methodology to identify global systemically important insurers, which will soon be finished and then referred to the Financial Stability Oversight Council for implementation.
INTERNATIONAL REGS McRaith also serves on the U.S. Financial Stability Oversight Council, where he is pushing to make sure the designation process for international insurers is coordinated with that council’s U.S. designation of systemically important insurers.
The International Association of Insurance Supervisors also released a draft of a “Common Framework for the Supervision of Internationally Active Insurance Groups,” known as ComFrame. It’s meant to establish guidelines for how regulators around the world can work together to supervise internationally active insurance groups and close regulatory gaps.
The Federal Insurance Office and state insurance regulators seem to disagree over how ComFrame would work. State regulators want federal regulators to defer to the states. McRaith’s office is resisting. Imagine that—regulators fighting over turf!
EXCHANGE TIME During the meeting, the NAIC created yet another working group, this one to help states create insurance exchanges as mandated under the Affordable Care Act. Pennsylvania Commissioner Michael Consedine, who chairs the group, promised it was not created by reform opponents to “throw grenades at Obamacare.” Its purpose is to provide guidance and explore issues that may arise in states that do not operate their own exchanges.
Washington Commissioner Mike Kreidler, a working group member and a healthcare reform supporter, suggested it should also focus a light on the consequences of states saying no to establishing their own exchanges.
SURPLUS LINES NIPR, the electronic producer license application processing affiliate of NAIC, announced that a “majority” of the states have complied with the Dodd-Frank Act prohibition against collecting surplus lines licensing fees unless the state participates in a “national database” for licensing and renewals. Washington is reported to be the only state that is not participating. Moreover, the regulators created a new working group to review the status of state compliance with the Dodd-Frank surplus lines provisions. A new working group is usually not cause for excitement, but in this case it could spur the states to address the non-uniform and inefficient choices that many of the states have made in implementing the surplus lines reforms.