Posted on 19 Mar 2010
The checks and balances of a multi-state approach to group supervision and financial assessment is a key strength of the state regulatory system, the National Association of Insurance Commissioners (NAIC) told Congress on Thursday.
Testifying today before the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, state regulators referenced key tools, practices and model laws used by states to assess the financial condition of insurance groups. Today’s testimony highlighted cross-border supervision and cooperation, NAIC coordination activities and peer review provided by multiple jurisdictions.
“Through the NAIC, regulators have created three core solvency surveillance mechanisms – reporting, analysis and examination – to ensure that obligations to policyholders and other parties are met both today and in the future,” said Sean Dilweg, Wisconsin Insurance Commissioner. “In our system of state regulation, it is imperative that regulators around the country have access to these sophisticated tools, particularly when assessing large, multi-state insurers.”
Dilweg discussed tools such as the NAIC Financial Regulation Standards and Accreditation Program and Financial Analysis Working Group to ensure that regulators are effectively maximizing resources to protect consumers and the solvency of their regulated entities.
“Every state has extensive authority, based on the NAIC Insurance Holding Company System Regulatory Act, to effectively supervise insurance groups,” said Ann M. Frohman, Nebraska Insurance Director. “Our system of multiple jurisdictions and peer review for insurer groups contributes to a “race to the top” approach.”
Both Dilweg and Frohman also spoke about ongoing state coordination with federal agencies, such as the Office of Thrift Supervision and the Federal Reserve.