The National Association of Insurance Commissioners (NAIC) Executive Committee has scuttled an emergency request from the life insurance industry to relax capital and surplus requirements.
“So far the insurance industry is in much better condition than most of the rest of the financial services sector because of strong state solvency regulations,” says NAIC President and New Hampshire Insurance Commissioner Roger Sevigny. “Simply put, the industry has not made a credible case for why we need to make changes on an emergency basis, and why those changes should be limited to the specific proposals made by the industry.”
The vote came on the heels of a four-hour public hearing where both industry representatives and consumer groups hostile to the initiative were allowed to comment.
J. Robert Hunter, director of insurance for the Consumer Federation of America (CFA) was opposed to both the initiative to relax the requirements and the process under which they were considered.
“State insurance regulators stepped back from the precipice and acknowledged that there is no emergency requiring reductions in the capital and reserves life insurers must hold to meet their promises to policyholders,” Hunter says. “We expect regulators to now take the time to carefully analyze the impact of specific proposals on the financial condition of the life insurance industry as a whole, and on individual insurers before embarking on another precipitous action. We also expect them to make a much better effort to be transparent regarding what proposals they are considering and to take into consideration the public input that they receive.”
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