Posted on 07 Dec 2009
The Restructuring Mechanisms for Troubled Companies (E) Subgroup of the National Association of Insurance Commissioners (NAIC) unanimously adopted the White Paper on Alternative Mechanisms for Troubled Companies during its meeting at the NAIC Winter National Meeting here.
The Subgroup's study of alternative mechanisms was prompted by the growing number of troubled insurers seeking to engage in run-off or restructuring as opposed to being placed in traditional receivership proceedings. In addition, improvements to the early detection of financially troubled insurers by the states and certain insureds' requirements for A-rated coverage also influenced the Subgroup’s report.
“State regulators have well-developed receivership statutes to handle impaired and insolvent insurers,” said Thomas Sullivan, Chair of the Subgroup and Connecticut Insurance Commissioner. “The White Paper highlights various mechanisms available to insurers and regulators both inside and outside the U.S., as well as addressing the advantages and disadvantages.”
More than 20 interested parties in the field of global insurance provided assistance and input into the drafting of the report. The NAIC Subgroup's White Paper will now be considered by the NAIC Financial Condition (E) Committee.