NAIC Asks Company CEOs To Pay A Visit

NU Online News Service, Oct. 20, 3:53 p.m. EDT

ORLANDO, Fla.–Chief executives be advised that regulators are looking for you, but just for a friendly chat.

Yesterday, Arkansas Insurance Commissioner Jay Bradford asked association representatives if they would speak to company chief executives about attending one of the National Association of Insurance Commissioner meetings to discuss the state of affairs between regulators and insurers.

Commissioner Bradford said that they would not be coming before the NAIC's Industry Liaison Committee for a hearing, but instead "to find some common ground so we can work together."

His invitation came during the association's summer meeting here in Orlando.

Industry association representatives from the property and casualty and life and health sides said they felt some would be amicable to such a request, though they might not be able to get chief executive officers to come. They might stand a better chance of getting chief financial officers to attend.

David F. Snyder, vice president and associate general counsel, public policy, for the American Insurance Association, said the industry is willing to "explore any ideas that come forward" and noted that there have been cases in the past where heads from actuary firms met with regulators to discuss ideas.

Deidre Manna, vice president, industry, regulatory and political affairs with the Property Casualty Insurers Association of America, said that it would help to gain their attendance if there were specific issues the committee sought to discuss.

There was no date set for when this discussion might occur.

Turning to another matter, insurance industry association representatives said they planned to file formal comments with the Financial Stability Oversight Council–responsible for examining "systemic risk" within the financial services industry–as it begins to meet to implement the Dodd-Frank Act, the new financial reform law.

Ms. Manna echoed the comments of other association representatives that the insurance industry does not pose a systemic risk, underscored by the performance of the industry during the recent economic crisis. She noted that insurers survived the crisis virtually unscathed and did not a pose a threat to the economy.

She also credited the financial regulation of the industry and the strict capital requirements insurers face for their performance.

"Insurers are walled off from the economy, and the failure of one insurer does not spread to others," she said, adding that the state guaranty system also contributes to institutional stability.

On another subject, Mr. Snyder presented a review on the health of the insurance industry. He noted that overall, insurers are doing very well, despite the drop in premium rates, thanks in no small part to declines in losses. He said the decline in losses was more than an accident of fate, and credited insurers' work in risk management, improvements in regulation and legislation, plus other factors for the carrier's performance.

To see the industry improve even more going forward, Mr. Snyder said there needs to be more modernization of rate and form and streamlining of commercial lines.

These changes, he said, would help the economy by allowing commercial insurance customers rapid access to insurance and making the industry globally competitive.

"We have a good story here," Mr. Snyder remarked.