NAIC - Insurance Regulators - Snippets - 1970s

  • (p1501) - John Durkin, New Hampshire Insurance Commissioner: As a starting point, there is little regulation of the life insurance industry by the States.

    • The States do little with respect to life insurance regulations for many reasons, mainly because there are very few problems with complaints over claims.

    • Most of the staffs are involved with complaints relating to automobile insurance and health insurance.

    • Life insurance is sort of the stepchild of many, if not most, insurance departments.

1973 0221 and 0222 - GOV (Senate) - The Life Insurance Industry - Philip Hart (D-MI)  ---  [BonkNote-Part 2 of 4]  ---  [PDF-733p-GooglePlay] 

  • (p117-120) - Exhibit Il  which shows that, in the last fifty years, no less than 21 different attempts have been made to solve this problem. 

  • Furthermore, enacting a federal statute on life insurance cost disclosure would only address itself to part of the problem.

--  Statement of Stanley C. DuRose, Jr. -  NAIC / Wisconsin Commissioner of Insurance - (p107-131)

1973-2, NAIC Proceedings

1973 0221 and 0222 - GOV (Senate) - The Life Insurance Industry - Part 2 of 4 - Philip Hart (D-MI)  ---  [BonkNote-Part 2 of 4]  ---  [PDF-733p-GooglePlay]   

  • Speaking before state insurance commissioners at the Washington Hilton Hotel or what each called the "Equity Fundings fiasco," Fred A. Mauck, Illinois' newly named director of insurance, said that because of the "hard work" of state regulators Equity Funding was "not a tragedy but an absurdity."

    • "Quite frankly," he said, "it raises a troublesome, but entirely proper, question as to the effectiveness of insurance regulation." 

1973 0605 - NYT - Insurance Commissioners Plan Surveillance Study - Equity Funding Corporation of America, by Robert J. Cole, Special to The New York Times - [link]

  • W. Keith Sloan, Actuary for the Arkansas Department, presented a statement identifying problems associated with special endowment policies or other policy forms which will frequently contain an endorsement, rider or side-fund, and which frequently are improperly sold to the public.

    • The statement by Mr. Sloan is attached to this report. (p750)

  • In executive session the subcommittee voted to establish a task force to identify the particular types of policy forms involving the problems discussed by Mr. Sloan. (p696)

1975-1, NAIC Proceedings

  • (4) At what stage do projections become misrepresentations?  (Report - p750)

  • The classic case of misuse, which called the problem to our attention, had to do with a disclosure form given a policyholder or applicant and sent to us in what appeared to be horror by an agent of another company.

    • On this form the insured was a girl, age five. Deposits were illustrated as accumulated at 9% for sixty years.

    • The company does not earn 9% and has no investments with sixty-year maturities.

--  W. Keith Sloan, Life Actuary, Arkansas Insurance Department

1975-1, NAIC Proceedings

  • (p44) - NAIC - William H. HUFF III, NAIC President, Iowa Insurance Commissioner -  If the Society of Actuaries' research is accurate, and I assume that it is, the additional disclosures really didn't make much difference in the ranking of how these various ranked in cost I would have a feeling, and I've been in this for about years, and we've been very active in the complaint area, too, you have two problems with a complicated formula.

    1. If you turn them off, they're not going to buy anything. They aren't going to understand it....

    2. ....the other problem, the agent out In the field, and unless he's carrying a book around with him, I'm not sure that he could explain what all of this is either.

  • Richard STONE (D-FL):  In other words, your impression on a practical level is that the likelihood of the veteran or the consumer, in this it would be the veteran, would not necessarily be enhanced by the more complicated approach but very well be and would be enhanced as to relevance and as to relative cost by the NAIC model approach ?

  • Mr. HUFF:  We would hope so. I'm also the "blue sky" administrator in Iowa, and we know pretty much that if we don't get everything that should be disclosed In the first four pages it's not going to be read, and things that we really want disclosed we put on the front page and put it in big type.

  • Senator Stone: In other words, you're saying if it's in the fine print it's the same thing as not ever being disclosed?

  • Mr. Huff:  That's right.

  • Senator Stone: If It's too much fine print nobody reads it.

1975 1203 and 1204 - GOV (Senate) - Veterans Insurance Information Disclosure, Richard Stone (D-FL)  ---  [BonkNote]  

  • (p43) - Dan Andersen, NAIC / Iowa Insurance Commission, Actuary:  ....so we developed a buyer's guide concept where we want to explain how you use the index.

    • Well, if you explain how to use the index, you ought to explain what the policy is and what choices a buyer has,

    • ... and we became convinced that the worst decisions that were made weren't necessary because the buyer bought a high cost policy but that he bought an inappropriate policy for his needs and for his budget.

  • Senator Stone (D-FL).  In other words, what we're looking for is not relative cost so much as relevance.

  • Dan Andersen.  Right, relevance to the buyer's needs and abilities to pay.

--   Dan Andersen, director of the Life and Health Insurance Division and chief actuary of the Iowa Insurance Department and chairman of the Cost Disclosure Task Force of the NAIC

1975 1203 and 1204 - GOV (Senate) - Veterans Insurance Information Disclosure, Richard Stone (D-FL)  ---  [BonkNote]

LIBG - Life Insurance Buyer's Guide - Index

NAIC – Operations / Budget / etc

  • 2022 1216 – NAIC – 2023 Budget – Attachment Two – Executive (EX) Committee and Plenary – Executive Summary –  119p
  • (p12) – Group Cap Adjustment
    • 5. The ACLI requests the NAIC use its unrestricted net assets by increasing its annual deficits rather than increasing the cap on database filing fees to generate additional revenue. Although the database filing fee group cap has not been increased since its inception (despite an increase in the number of mergers and acquisitions resulting in large groups), they do not see the need to increase the group cap to enhance revenues given the NAIC’s projected Net Asset balance at the end of 2023.
    • NAIC Response: The NAIC appreciates the ACLI’s comments and wishes to note that for 2022, the NAIC is projected to have a $3.6 million operating loss, and because of investment losses, is budgeted to experience a $18.9 million reduction in surplus during 2022. Additionally, before the inclusion of the filing fee cap revenue adjustment and considering the other fiscal impact statements, the NAIC’s 2023 operations are budgeted to incur a $9.4 million operating loss (which is reduced to a $4.8 million operating loss by the increase in group cap revenues by $4.6 million). Also notable, the budget operating loss does not include the $11.7 million in planned capital expenditures, an increase of $5 million over 2022’s planned capital spending of $6.7 million. The ACLI does correctly identify that NAIC’s revenues, before the cap adjustment, do indeed increase, however expenses are budgeted to grow at a significantly faster rate. Several of the NAIC’s systems, as indicated throughout various fiscal impact statements, are 20+ years old, and accordingly many of these systems will require significant upgrades. These planned and future upgrades will provide the members, insurance companies, and consumers with the access, data, and services they expect and deserve.

Market Analysis

  • NAIC – A Reinforced Commitment: Insurance Regulatory Modernization Action Plan
    • 2006 (updated) – NAIC – A Reinforced Commitment: Insurance Regulatory Modernization Action Plan – 20p
    • 2003 1105 – GOV (House) – Reforming Insurance Regulation: Making the Marketplace More Competitive for Consumers, Richard H. Baker (R-LA)
      • [PDF-200p, VIDEO-?] 
      • NAIC – Mike Pickens (AL – Insurance Commisioner / NAIC President) – Testimony – 38p
  • We want to publish a market analysis guide with instructions for using complaint data, financial data and market share information to target the most significant market problems.

—  Mike Pickens, Arkansas Insurance Commissioner / NAIC

2003 – SOA – Current Events-Statutory, rsa03v29n147pd – Society of Actuaries – 26p

NAIC – Name Changes

  • 1980-2, NAIC Proc.
    • The chairman pointed out the confusion which has occurred with the question of life insurance cost disclosure being divided between this task force and the Evaluation of the Life Insurance Disclosure Regulation Task Force.
    • Following discussion, and a motion duly made, the subcommittee took appropriate action to:
      • … rename the Evaluation Life Insurance Cost Disclosure Task Force to the Life Insurance Cost Disclosure Task Force and
      • … renamed the previously existing Cost Disclosure Task Force under the direction of Ms. Edwards to be entitled The Manipulation, Lapsation, Dividend Practices, and Annuity Disclosure Task Force.
  • 1983-2, NAIC Proc. – Variable Life Insurance Task Force be renamed the Registered Life Products Task Force
    • [Bonk: I don’t think the name ever actually changed]
  • 1991-1A, NAIC Proceedings
    • (p142) – 2. Changed the name of the Invested and Admitted Asset Model Law Working Group to the Model Investment Law Working Group;
      • modified the charge to deal only with creating a model law on investments, and recommended continuation of the working group.

1990s – NAIC – Insurance Regulators – Government Hearings

  • 1993 0525 –  GOV (Senate) – When Will Policyholders Be Given The Truth About Life Insurance?, Senator Howard Metzenbaum (D-OH)  —  [BonkNote]
    • (p33) – NAIC – Statement of David Lyons (Iowa Insurance Commissioner (IA), On Behalf of the National Association of Insurance Commissioners 
    • I also serve, as you noted, as the chairman of the NAIC’s Life Insurance Committee, which has jurisdiction over several insurance consumer disclosure issues including life policy illustrations, which has been the subject of a lot of discussion this morning.
      • Access to information is the true key.
      • The NAIC has long been working to improve the availability and quality of information consumers receive.
    • (p34) – A buyer’s guide was added in 1976.
      • Thirty-two States now require that it be provided to consumers during the sale of insurance.
      • In 1983, it was upgraded to include information on universal life and other new developments in the insurance world.
      • As new products were introduced to the marketplace, new needs for consumer protection arose.
        • So in June 1989, our life insurance committee adopted disclosure statements to help consumers compare different types of interest-sensitive products.
        • The forms were then tested with consumers, and revisions were made in December 1989 based upon that consumer input.
        • These disclosure forms were then added to the NAIC universal life model  regulation.
    • (p34) – As with all areas of insurance regulation, however, our focus is not on what we did yesterday; it is on what we will do tomorrow.
    • (p34) – In addition, I hope this hearing itself sheds light, a spotlight, on the issue to encourage the States to focus greater attention on adopting the consumer protection measures which have already been developed by the NAIC.
    • (p34) – Giving consumers clear, relevant, and complete information plays an important role in any market, particularly in one as complex as insurance, and it is extra complex in the area of life insurance.
      • The NAIC has long recognized this fact, and I think our record reveals our commitment to consumer information.

1970s – NAIC – Insurance Commissioners – Government Hearings

  • 1975 1203 and 1204 – GOV (Senate) – Veterans Insurance Information Disclosure, Richard Stone (D-FL)  —  [BonkNote]
    • (p36) – William H. Huff III (Iowa) – President of NAIC, Statement 
    • (p44) – NAIC – Mr. William H. HUFF III – (IA): If the Society of Actuaries’ research is accurate, and I assume that it is, the additional disclosures really didn’t make much difference in the ranking of how these various ranked in cost I would have a feeling, and I’ve been in this for about years, and we’ve been very active in the complaint area, too, you have two problems with a complicated formula.
      1. If you turn them off, they’re not going to buy anything. They aren’t going to understand it….
      2. ….the other problem, the agent out In the field, and unless he’s carrying a book around with him, I’m not sure that he could explain what all of this is either.
    • Senator STONE:  In other words, your impression on a practical level is that the likelihood of the veteran or the consumer, in this it would be the veteran, would not necessarily be enhanced by the more complicated approach but very well be and would be enhanced as to relevance and as to relative cost by the NAIC model approach ?
    • Mr. HUFF:  We would hope so. I’m also the “blue sky” administrator in Iowa, and we know pretty much that if we don’t get everything that should be disclosed In the first four pages it’s not going to be read, and things that we really want disclosed we put on the front page and put it in big type.
    • Senator Stone: In other words, you’re saying if it’s in the fine print it’s the same thing as not ever being disclosed?
    • Mr. Huff:  That’s right.
    • Senator Stone: If It’s too much fine print nobody reads it.

GOV to NAIC

  • 2021 0526 – FRB to NAIC – Randal K. Quarles, Vice Chair for Supervision Board of Governors of the Federal Reserve System to National Association of Insurance Commissioners International Insurance Forum, Federal Reserve Board – 9p
    • Accordingly, Team USA and other interested jurisdictions continue to build on our work on the Group Capital Calculation and Building Block Approach to develop what the IAIS terms the Aggregation Method which could be considered an equivalent implementation of a group capital rule for large, internationally active insurers in the United States.

NAIC – Role

  • I am here on behalf of the NAIC, and my purpose today is really to give some insight into how State regulators assess the financial strength of an insurer and describe our unique regulatory working groups that assist and improve us in this assessment.
  • Financial regulation is the critical component that insures our most important consumer protection, which is solvency.

—  Sean Dilweg, Commissioner, State of Wisconsin, Office of the Commissioner of Insurance

2010 0318 – GOV (House) – Insurance Holding Company Supervision –  [PDF-183p, VIDEO-?]

  • 1991 0409 – GOV (Senate) – How Insurance Laws Are Made:  The NAIC and State Adoption of NAIC Model Law
    • [PDF-379p-GooglePlay, VIDEO-?] ->Not on govinfo.gov – R
    • Senate – Committee on the Judiciary -Subcommittee on Antitrust, Monopolies, and Business Rights

Regulation – Insurance – Coordination

  • (p10) – Instead of conducting any analysis of the efficacy of coordinated regulation at the state level, FSOC dismissed it. 

  • (p14) – 5 The NAIC offers this discussion of collaborative action in part as a rebuttal to the Scholars of Insurance Regulation’s claim that state insurance regulators are frequently not able to coordinate effectively among themselves. See Scholars Br. at 17.

2015 0626 – 15-cv-45 – NAIC – Document 43 – Consent Motion of the National Association of Insurance Commissioners for Leave to File Brief as Amicus Curiae in Support of Plaintiff Metlife, Inc. – 32p

  • (p17) – The problem, of course, is that state insurance regulators frequently are not able to coordinate effectively among themselves.

2015 0515 – DOC 34-1?? – 15-cv-45 – Brief of Scholars of Insurance Regulation as Amici Curiae in Support of Defendant Financial Stability Oversight Council – 28p

  • I realized, there was nobody else.
  • There was no one for me to get help on this. This was it.
    • I’m in the room.
      • Geithner’s asking.
      • Paulson’s listening. 
  • I finally had no one else to ask.
    • I mean, my experts obviously.
  • But it was one of those moments in life where you’re like, “Okay, this is it. You’re either going to get this right, or you’re going to get it wrong.

There’s no one else to go and chat with about it…

2021 – YPFS – Lessons Learned Oral History Project: An Interview with Eric Dinallo – 19p

  • (p17) – Baxter: One of the fears was that if things had gone in another direction and AIG had to be wound up, each one of the state commissioners would have had its own proceedings.
    • That was part of what created systemic risk for AIG, where there would be a fragmented series of resolutions and every insolvency official appointed by a commissioner would try and seize AIG assets.

2018 1120 – YPFS – Lessons Learned Oral History Project Interview: Thomas Baxter  —  [BonkNote]  —  19p

  • Ed ROYCE – (R-CA)
    • So we have the SEC. We have the Fed. We have the OCC that all serve to get financial instruments to represent the interests of the banking industry in terms of gaining access to markets overseas, and you are speculating that the National Association of Insurance Commissioners is not going to have that same clout or seat at the table in terms of opening those markets for competition?
  • Christopher M. Condron, Chairman of the Board and Chief Executive Officer, AXA Equitable Life Insurance Company, on behalf of the American Council of Life Insurers (ACLI)
    • They just cannot.
    • You know, they cannot agree on what the reserving requirements will be on universal life insurance policies, or when they do agree, they cannot get all of the States to go along, and that is the  frustration, I think, Commissioner Bell and all of the commissioners have always had with the NAIC.  (p163)

2007 1003 – GOV (House) – The Need for Insurance Regulatory Reform – [PDF-163p