NAIC Names Lindeen 2015 President; Leadership Sees International Talks, PBR Approval Among Top Issues
November 25, 2014 by Thomas Harman
WASHINGTON – Monica Lindeen, the new National Association of Insurance Commissioners’ president, said international efforts to move toward a global capital standard proposed by the International Association of Insurance Supervisors will be among the major issues the NAIC will deal with in her tenure.
The officers, elected Nov. 19 at the conclusion of its Fall National Meeting in Washington, will assume their posts beginning Jan. 1. Montana Insurance Commissioner Lindeen succeeds North Dakota Insurance Commissioner Adam Hamm as the NAIC president. Pennsylvania Insurance Commissioner Michael Consedine succeeds Lindeen as president-elect and Kentucky Insurance Commissioner Sharon Clark succeeds Consedine as vice president. Wisconsin Insurance Commissioner Ted Nickel becomes the new secretary-treasurer, winning a vote among commissioners over Colorado Insurance Commissioner Marguerite Salazar.
After the elections, Lindeen and the new leadership told assembled media the NAIC’s efforts to craft a unified position with federal agencies engaged in talks with the IAIS over a global capital standard is one of the paramount topics for 2015.
Consedine said the importance of the capital standard issue is gaining traction in Congress. He testified to a House subcommittee Nov. 18 that requiring companies to hold higher levels of capital would make it harder to create more jobs and new insurance products (Best’s News Service, Nov. 18, 2014). He said the NAIC would continue to represent U.S. consumers to make certain international standards work within the United States.
Efforts to have the NAIC present a unified domestic message with the Federal Insurance Office and the Federal Reserve regarding the IAIS’ attempts to create global capital standards is improving, Consedine said. During the recent IAIS meetings in Amsterdam, he said the message was more coherent. “I think it made a difference,” he said.
Principles-based reserving is another issue the NAIC will pursue in 2015. The NAIC in 2012 voted to send principles-based reserving to states for approval, with supporters believing that having it as a national standard would render moot the need for insurers to use captives to reinsure XXX term-life and AXXX universal life secondary guarantee reserves. Supporters of principles-based reserving view those types of captive reinsurance as creating redundancy in reserves. However, a principles-based reserving task force has approved Actuarial Guideline 48, which would at least temporarily continue use of XXX and AXXX captives until principles-based reserving is ratified.
Forty-two states have to ratify principles-based reserving but states ratifying also must have 75% of the national premium in order for the measures to become national accreditation standards. To date, 18 states comprising 28% of insurance premium have passed principles-based reserving laws. Perhaps a dozen more — including Montana — are expected to consider legislation in 2015. “We’re definitely on track to getting the number of states we need,” Lindeen said.
The NAIC executive committee on Nov. 17 announced the formation of a new cybersecurity task force that Lindeen said would be a point of emphasis during her term. Members have not been chosen, but the group has been tasked with monitoring cybersecurity developments; advising, reporting and making recommendations to the Executive Committee on cybersecurity issues; representing the NAIC and communicating with other entities and share cybersecurity information when appropriate.
Clark also mentioned the implementation of the Affordable Care Act as another continuing issue. She said the NAIC is watching developments in a U.S. Supreme Court case, King v. Burwell, that questions whether the ACA limits tax subsidies to individuals who buy health insurance in state-based exchanges. Should the court rule that it does, the structure of health care in 36 states that allowed the federal government to establish health exchanges would be impacted. When asked if states would simply pass laws declaring themselves state-based health exchanges to address a potential coverage gap, Hamm said it was unlikely in his state, where lawmakers easily defeated such a provision when they last held a legislative session in 2013. He said the court might not be expected to rule on the case until after many legislative sessions have ended.