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Date November 5, 2010 Author Connie Jasper Woodroof Email connie.woodroof@stoneriver.com
The NAIC just completed its last National Meeting of the year. This post will cover the activity that occurred during that meeting however, please do not think the NAIC is finished for the year. There are several issues that are still open that the NAIC intends to address before year-end either by conference calls or interim meetings.
Blanks Working Group
There was a very light agenda for this group. Four new proposals for 2011 reporting were adopted, one item was deferred for further discussion, and two new proposals were exposed for comment with a comment deadline of February 24, 2011. Two memoranda were received from the Statutory Accounting Principles Working Group regarding year-end disclosures for the new Note 20 (SSAP No. 100) and Note 9 (SSAP No.10R). The group was also notified that another disclosure was likely to be added for this year-end providing information on Retained Asset Accounts. This disclosure was later approved by the Financial Conditions (E) Committee and will be required in written format (only) for this year-end.
Statutory Accounting Principles Working Group (SAPWG)
SAPWG adopted the following items:
- Revisions to SSAP Nos. 5 and 25 regarding the accounting for guarantees. The revisions will be affective in 2012 to allow for a transition period.
- SSAP No. 16R which consolidates the accounting for Electronic Data Process equipment accounting guidance into one SSAP. Previously the information was scattered throughout several SSAPs. This SSAP does not change any of the current accounting guidance.
- After several years of work, SSAP No. 35R, Guaranty Funds and Other Assessments, was finally adopted.
Items adopted that were considered nonsubstantive in nature were:
- A new process was approved to remove 100% superseded SSAPs and INTs from Volume 1 of the AP&P manual and move them into a new appendix in Volume III.
- A clarification of the definition of loan-backed and structured securities in SSAP No. 43R.
- New disclosure requirements under SSAP Nos. 51, 52 and 62.
- Changes to SSAP No. 86, Derivatives, to adopted changes that have already been adopted by GAAP.
Several new items were exposed for comment for later discussion.
Capital Adequacy Task Force
This group released for comment a model law request that would change the Risk-Based Capital for Insurers Model Act to increase the RBC percentage that triggers the life RBC trend test from 250% to 300% (this had previously been rejected by the Life Risk-Based Capital Working Group). Reports from the HRBC, PRBC, LRBC and the Solvency Modernization Subgroup were heard.
Financial Condition (E) Committee
The E committee adopted a 2010 Annual Statement disclosure related to Retained Asset Accounts. Additionally, the group heard reports from several of the other groups who report to them.
Reinsurance Task Force
In 2009, this Task Force adopted the Reinsurance Regulatory Modernization Act which would drastically change the way companies would be approved as reinsurers within the US. The Act as written required the involvement of the Federal government for the approval of foreign reinsurers, which meant action by Congress. However, the action has not happened at the present time. Therefore, the NAIC has decided to revise the Credit for Reinsurance Model Law and the Credit for Reinsurance Model Regulation to incorporate some of the Acts new language. The NAIC’s Executive Committee voted to move forward with the revisions, so that will now become the focus of the Task Force.
Joint Executive/Plenary
Much of what this group voted upon and discussed was routine follow up from the other NAIC groups. However, there was one activity that should be mentioned. The group adopted the Regulation for Uniform Definitions and Standardized Methodologies for Calculation of the Medical Loss Ratio for Plan Years 2011, 2012, and 2013. There was considerable last minute discussion of changes before the final vote.
The NAIC announced that the Central Office will change locations in 2012, however, it will remain in Kansas City, Missouri.
As any other last minute changes are adopted, we will be sure to let you know. May the force be with you!
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