Our Positions | Receivership/Insolvency - Recovery/Resolutions Plans


The NAIC has a task force that addresses issues related to insolvency of companies, including rehabilitation of troubled companies, the liquidation/receivership process for insolvent companies and the operation of the guaranty funds that pay the claims of policyholders of insolvent companies. These issues arise both in the U.S. context and in the international standards set to address resolution and recovery of global companies that operate across borders.

More particularly the task force duties include: monitoring the effectiveness and performance of state administration of receiverships and the state guaranty fund system; coordinating cooperation and communication among regulators, receivers and guaranty funds; monitoring ongoing receiverships and reporting on such receiverships to NAIC members; developing and providing educational and training programs in the area of insurer insolvencies and insolvency guarantees to regulators, professionals and consumers; developing and monitoring relevant model laws, guidelines and products; and providing resources for regulators and professionals to promote efficient operations of receiverships and guaranty funds.

The product from this task force relates to NAMIC members especially through the costs of insolvencies members incur from guaranty fund assessments. If the practices of the receiverships managing insolvent companies are inefficient and unnecessarily costly there will be fewer assets remaining to pay policyholder claims and more will have to come from the insurance marketplace.

NAMIC Position

NAMIC follows the issues that affect companies from the criteria for deeming a company in hazardous financial condition to the attempts at rehabilitation, efforts to liquidate and the operations and costs of guaranty fund. Insolvencies in the industry affect the reputation of the entire industry so NAMIC supports a strong, effective and efficient solvency regulatory system. Also, due to our members’ ultimate obligation to pay assessments to the guaranty fund NAMIC has an even stronger interest in the continued solvency of the companies operating in the insurance market.

Our advocacy goal is to maintain basic solvency, but not to prop up poorly managed companies. Consequently, once the regulatory decision is made that a company cannot be saved, we want the receivership/liquidation process to work as efficiently as possible to preserve assets that can protect the policyholders. If adequate assets do not remain in the insolvent company to meet basic policyholder obligations, then we support an efficient guaranty fund process to protect those policyholders and pay the claims incurred under the insolvent company. Overall, the main concern must be the protection of the policyholder.

NAMIC News on the NAIC and Receivership and Insolvency

RBC Framework Set to Accommodate Expansion of Bond Factor Categories

August 12, 2019 The Property and Casualty Risk-Based Capital (E) Working Group had a brief discussion regarding the bond pages in the property/casualty RBC formula and adopted an updated framework to accommodate the expansion of the number of bond... Read more

Financial Stability Task Force to Examine Collateralized Loan Obligations

August 12, 2019 The Financial Stability Task Force received a report from Eric Kolchinsky, director, Structured Securities Group at the NAIC’s Security Valuation Office, about collateralized loan obligations. The report detailed the insurance industry’s exposure to... Read more

Antifraud (D) Task Force Discusses Reports From Two National Crime Groups

August 12, 2019 New Mexico’s Insurance Superintendent John Franchini on Aug. 4 chaired the Antifraud (D) Task Force. The group discussed creating an Antifraud Plan Repository as well as the possibility of a more standardized approach to combating fraud across... Read more

Comprehensive Bond Fund Project Gets Green Light From Capital Adequacy Task Force

August 12, 2019 The Capital Adequacy (E) Task Force received a referral from the Valuation of Securities (E) Task Force on a request for assignment of risk-based capital charges for investment funds that predominately hold bonds. In a discussion led by the chair of... Read more

Many Controversial Statutory Accounting Proposals Exposed for Comment

August 12, 2019 As usual, the Statutory Accounting Principles Working Group had a robust meeting agenda when it met on Aug. 3. There were only a few items adopted for statutory accounting purposes, but there were several new and ongoing issues discussed. Read more

Contacts

Michelle Rogers
Assistant Vice President - International & Regulatory Affairs

317.876.4270

  Michelle