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

NAIC Suspends Spring National Meeting; New Priority Schedule Forthcoming

March 30, 2020 As the growing COVID-19 heath crisis continues to impact the lives of millions of Americans and as the insurance industry continues to adapt to shifting dynamics, the operational impact on insurance commissioners and their staffs is becoming... Read more

Investment Accounting Proposal Likely Delayed Until 2021 Reporting; Cash Pools to Maintain Current Accounting Treatment

March 30, 2020 The Statutory Accounting Principles (E) Working Group was the only working group to meet and did so via conference call on March 18, a call that experienced many technical difficulties likely contributing to the decision to suspend the remainder of the... Read more

Mid-2020 Time Frame to Adopt Group Capital Calculation Tool in Doubt as NAIC Postpones Working Group Meetings

March 30, 2020 The Group Capital Calculation (E) Working Group was supposed to meet in Phoenix to give a status update on the field-testing exercise that wrapped up in the final months of 2019; however, when the NAIC decided to go virtual with the meetings... Read more

Casualty Actuarial and Statistical Task Force Working on Final Draft of Predictive Modeling White Paper Without Deadline

March 30, 2020 The NAIC Casualty Actuarial and Statistical (C) Task Force continues its work on finalization of a predictive modeling white paper without any stated deadline for final exposure. As NAMIC has discussed, the CASTF body, comprised mainly of... Read more

Privacy Protections (D) Working Group Regulator-Only Efforts Remain Unseen

March 30, 2020 On its first call of the year held in mid-February, the Privacy Protections (D) Working Group indicated that it would be going into regulator-only mode for a while and would prepare a key issues document that would be circulated for the Spring National... Read more

Contacts

Jonathan Rodgers
Director of Financial and Tax Policy

317.876.4206

  Jonathan