NAIC Receiver Model Draws Fire From Insurers
By Steve Tuckey
National Underwriter News
May 23, 2005
A National Association of Insurance Commissioners panel approved a receivership model act Thursday in a process insurance industry trade groups said was too rushed.
A joint letter signed by six insurance trade groups urged the Insolvency Task Force to adopt a longer comment period and set a hearing for the summer NAIC meeting next month, instead of current plans to approve it at that time.
As much support that exists for improving the statutory framework, there is equally great support for doing the job correctly, the letter stated.
The proposed model legislation establishes procedures and the rights of parties involved in the liquidation of an insurer. While there is currently an NAIC model on the books, no state has adopted it in its entirety.
The letter cited the fact that the complex model was 78 pages long and was released on May 3.
Could not such an ambitious project of such mammoth scope and financial significance benefit from a meaningful opportunity to obtain input from the stakeholders who would be affected by it? the letter stated.
Mike Koziol, assistant general counsel for the Property Casualty Insurers Association of America, also criticized the substance of the model calling it a one-sided model that favors liquidators over other parties with financial interests related to insurer solvencies.
The Task Force also recommended that a substantially similar model become an accreditation standard, which would virtually force all states to adopt it.
We strongly believe that is inappropriate, as accreditation should be related to solvency matters, Mr. Koziol said. While currently, accreditation requires that a state address liquidation in its laws, this goes far beyond that.
Task Force chairman Don Bryan, who is also the New Jersey commissioner, had no comment on the industry criticism of the model.