N.Y. Dept. Details SVO Streamlining Plan Atlanta
The New York insurance department has offered a plan for streamlining the work of the Securities Valuation Office, an arm of the National Association of Insurance Commissioners.
During the spring NAIC meeting here, the four-part plan was detailed to a very receptive industry.
The plan calls for exempting all NAIC 1- and 2-rated securities, which are investment grade and rated by rating agencies.
A 45-day exposure period is anticipated with possible implementation as early as the summer NAIC meeting in June.
The second point in the plan would be to establish a procedure of utilization of resources for research.
More long-term goals include exempting all securities rated by a rating agency from filing and considering alternatives for the filing of securities that are not rated by rating agencies.
The announcement was praised by the American Council of Life Insurers, the National Association of Independent Insurers, the National Association of Mutual Insurance Companies, the Alliance of American Insurers, and the National Association of Life Companies.
New York Superintendent Greg Serio told attendees at the SVO session that "it provides an opportunity to take a powerful tool and make it more powerful."
The changes will be revenue neutral, he added. These steps will offer the "freedom to reshape the SVO."
There has been interest by the industry expressed for supporting these activities, making it possible to "get out of a la carte charging and create a new fee structure."
It is time to make these changes, he continued.
Such changes have been discussed since 1999 when a study was prepared to see how the operation could be made more efficient.
In an interview, Mr. Serio said that the department was offering the plan now "because we have been talking about this for a long time."
"There are increased challenges for state regulators and it is important to better use resources," he added. To simply confirm credit ratings is not a good use of these resources, Mr. Serio explained.
And, for carriers, particularly smaller insurers, there has been a disparate cost impact for filing securities, he continued.
Mr. Serio added that the plan to better use SVO resources is not related to current state budget crises and their impact on state insurance departments. The plan was under discussion long before state budget crises were an issue, he said.
NAIC Executive Director Cathy Weatherford said that she had just received the proposal and had not had time to evaluate it to make sure that it would be revenue neutral to the NAIC.
Jim Connolly is a senior editor for National Underwriters Life-Health/Financial Services edition.
Reproduced from National Underwriter Edition, March 17, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.
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