Kevin McCarty

  • Former Florida Office of Insurance Regulation
  • 2012 President of the National Association of Insurance Commissioners
  • 2014, the NAIC formed the ComFrame Development and Analysis (G) Working Group (CDAWG) - Kevin McCarty (FL)
  • 2015?? - GOV - Pay for Play, IAIS, NAIC reference.
  • Serial No. 110-140 (House Hearing) - Long-Term Care Insurance: Are Consumers Protected for the Long Term?
  • 2016 - IAIS - Youtube - Surplus Notes
  • GOV - Money back for Annuity Customers
  • The State of the Insurance Industry and Insurance Regulation
    • [PDF-56p, VIDEO-Senate] 
    • Kevin M. McCarty, Commissioner Florida Office of Insurance Regulation, On Behalf of the National Association of Insurance
      • The fundamental tenet of our U.S. system is to protect policyholders by ensuring the solvency of the insurer and its ability to pay insurance claims. Written Testimony - (p2) - 6p
  • The very nature of insurance significantly reduces the potential of a run-on-the-bank scenario for property/casualty, health and most life insurance products.
    • For those limited products sold by insurers that could be subject to some level of run risk, mitigating factors exist such as policy loan limitations, surrender/withdrawal penalties, and additional taxes.
  • Additionally, insurers typically maintain a diverse product mix so only a portion of the company’s products would be subject to the already reduced level of run risk.
  • Importantly, insurance products unlike other financial products, do not transform short term liabilities into longer term assets.
  • Insurance has shorter duration liabilities in many of the property/casualty and health product lines, and the assets held are similarly short term.
  • Insurance has longer duration liabilities in life and annuity product lines, and these liabilities are matched against similarly longer term assets.
  • To be clear, though, the business of life insurance, in and of itself, does not pose systemic risk to the broader economy or the U.S. financial system.

--  Kevin M. McCarty - NAIC Testimony- Commissioner, Florida Office of Insurance Regulation and President of the National Association of Insurance Commissioners - 8p

2012 1129 - GOV (House) - Examining the Impact of the Proposed Rules To Implement Basel III Capital Standards - [PDF - 439p, 

  • Committee on Financial Services - Joint Hearing Before the Subcommittee on Financial Institutions and Consumer Credit and the Subcommittee on Insurance, Housing and Community Opportunity
  • 2015 0429 - GOV (House) - The Impact of International Regulatory Standards -  [PDF-125p, Part 1-VIDEO-YouTube , Part 2-VIDEO-YouTube]
    • (p6) - NAIC - Statement of Kevin M. Mccarty, Commissioner, Florida Office of Insurance Regulation, On Behalf of the National Association of Insurance Commissioners 
    • (p6) - State regulators cooperate closely on a regular basis to provide leadership on global insurance issues and activities with a focus on policyholder protection and maintaining stable and competitive markets.
    • (p7) - For our part, the NAIC has longstanding procedures and ongoing responsibilities to seek input from consumers and other interested parties.  We will continue working on these issues through an open and transparent NAIC process
    • (p8) - In conclusion, State insurance regulators have a strong track record of effective collaboration and supervision.
    • (p18) - We have an approach at the NAIC, as you may be aware, a very transparent process for open discussion and dialogue, pros and cons of developing positions.
    • (p22-23) - The U.S. system is complicated, and a lot different than the rest of the world. And it is very difficult for the IMF and others to really understand the complexity of the U.S. system and the different parts that are involved.
    • (p23) - Mr. MCCARTY. Yes. We do have some concerns from State regulators’ perspective about the FSB since the FSB is really comprised of largely people who have a bank-centric view. We do have our U.S. representatives, and we feel very comfortable that they represent the U.S. position. But as the U.S. regulators of insurance, we feel that we should play a more prominent role and have a voice on the FSB. Our concern is that oftentimes the principals at the FSB view the insurance through the prism of banking. 
    • (p24) -  I don’t think there has ever been any more of a studied case study in the history of the financial sectors than has been done on AIG.
      • I have had the opportunity to discuss this with my colleagues across the different financial sectors.
      • And it is important to understand that the failure of AIG was not a failure of the State regulatory system; it was a failure of the regulatory system because of the financial services division that was left largely unsupervised.
      • It was under the Office of Thrift Supervision.
    • (p26) - I would say that we have a very complex interaction with the Federal Reserve and the FIO.
    • (p26-27) - We think that we are the subject matter experts on this, and would certainly like to give deference to that, but they have their own respective roles in this regard, and they make their decisions accordingly.
    • (p30) - Can I circle back to something you mentioned earlier, which I think is the absolute key issue going into the discussions about an insurance capital standard, which is, what is the guiding principle?
      • Is the guiding principle policyholder protection, which for the U.S. perspective is a ground-up, entity-based ring fencing?
        • You ringfence those assets so they are available.
      • The other concepts are the ongoing concern or creditor protection, very different policy measures and outcomes depending upon whether you are predicated on the policyholder protection, which we think is key.
    • (p32) - The NAIC has a process for going through and commenting on legislation.
      • But we certainly conceptually would agree with oversight.
      • We are particularly concerned, sir, about the lack of transparency at the Financial Stability Board and the lack of transparency at the IAIS. And if there is a way for Congress to provide some more transparency in that process, that would be welcomed.
    • (p32) - First of all, we have been in this business for over 130 years.
      • We have a remarkably strong record of providing solvency for our companies and providing a path for ensuring that policyholders get paid even in the resolution of a company.
      • We have withstood many financial crises.
      • And we have on-the-ground knowledge of insurance regulation, which everyone knows is very different than banking and securities.
      • And so for us to have an equal partnership at the table is critical.