The National Association of Insurance Commissioners' efforts to develop new regulations for self-insurance operations should be a more open process and give risk retention groups more say, a captive insurers' trade group has written regulators.
The letter from the Arizona Captive Insurance Association (AzCIA) said any new regulation should be subject to public hearing and take the form of model legislation that would require approval by state legislatures.
AzCIA's letter comes as NAIC is undertaking a review of risk retention groups after recommendations from the General Accountability Office in September that it draft new rules for them.
The GAO recommended that the states act through the NAIC to develop and implement broad-based, uniform baseline standards for regulating risk retention groups, including a change in their accounting methods.
The AzCIA letter to the regulators said that in undertaking its review of risk retention groups as a "truly fair, transparent and inclusive process at the NAIC is imperative."
The GAO, in asking NAIC to set standards for RRGs, said the rules should include regular filing of financial reports using a uniform accounting method and meeting NAIC's risk-based capital standards.
It also recommended the states consider standards for laws, regulatory processes and procedures, and personnel "similar in scope to the accreditation standards for traditional insurers."
The AzCIA letter, addressed to the president and chairs of the NAIC Risk Retention Working Group and Risk Retention Group Task Force, said it endorsed comments previously submitted by the Captive Insurance Companies Association.
AzCIA specifically recommended in the letter that the NAIC:
o Cast development of new uniform baseline standards for RRG regulation in the form of model laws that would then be considered by each state legislature, rather than in the form of NAIC standards for accreditation of state insurance departments–thus avoiding enactment through the political process.
o Adopt CICA's recommendation to hold public hearings as part of the process of developing the standards.
CICA said in its letter dated Oct. 24 that while CICA "supports good regulation of companies within the captive insurance industry, including risk retention groups, it strongly urges the NAIC RRG Working Group and Task Force to take into consideration that good regulation for RRGs may, and probably will, differ from good regulation for traditional insurers."
CICA said that the states, through the NAIC Working Group and Task Force, need to "take on the responsibility for developing reasonable baseline standards in a fair, transparent and fully informed manner."
"More importantly," CICA said, the NAIC has had "limited input from the interested public and, in the opinion of some, has deliberately isolated many of those who could and should be part of this discussion and process."
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