WASHINGTON, D.C. - The National Association of Insurance Commissioners' (NAIC) gathering Dec. 3-6 in Chicago includes a full and varied agenda, but the American Insurance Association (AIA), a Washington, D.C., trade association, is giving catastrophe funding top billing. The group says it will participate in a three-hour public hearing on catastrophe issues as regulators consider the idea of creating a national catastrophe fund.
In a statement urging the regulators to proceed carefully in their plans for an expanded federal or state government role in catastrophe funding, Tammy Velasquez, AIA vice president, state affairs noted, "The private sector system for funding catastrophes could be compromised if changes are hastily imposed."
Another problem area AIA will confront in Chicago is the Insurer Receivership Model Act (IRMA), which the Kansas City, Mo.,-based NAIC expects to consider adopting. "AIA strongly opposes adoption of the current draft of the IRMA model," said Steven Bennett, AIA assistant general counsel. Bennett claims there are several problems with the draft. "The most critical flaw is the omission of a large deductible provision," he said.
The AIA reports that its list of concerns also includes the proliferation of databases by the NAIC and the lack of confidentiality protections for these databases.
The NAIC's Anti-Fraud Task Force is continuing to work on its proposed anti-fraud national database, which AIA has "strenuously objected to," said David Snyder, AIA vice president and assistant general counsel. "We have repeatedly spoken and written against it because regulators have still not assured us of their ability to keep the information confidential. We plan to raise this issue during the Industry Liaison meeting."
AIA will also ask for further improvements to the NAIC's Criminal History Record Check Model Act ("fingerprint model"), which is moving through the NAIC process. "AIA continues to urge stronger terms to indicate the model is not a mandate that all states require officer and director fingerprinting in connection with company licensing applications," said Pamela Young, AIA assistant general counsel. "We also expect more discussion about the housing and security of any fingerprint repository."
Another issue to be considered during the Chicago meeting is a preferable industry alternative to the NAIC's proposal to insert Sarbanes-Oxley Title IV amendments into its Model Audit Rule, said Phillip Carson, AIA senior counsel, financial reporting.
"Back in June 2004, one could hear crickets chirping in the room after AIA suggested that a more productive approach would be for regulators and members of industry to work together collaboratively in developing an alternative," Carson stated. "The original proposal, to superimpose Sarbanes-Oxley onto the insurance financial reporting regime, would not work for various reasons. We are pleased to see this collaborative effort pay off with a much more efficient and useful tool for reporting on insurers' internal control over financial statements."
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