A committee of the National Association of Insurance Commissioners (NAIC) has deemed it necessary to prepare a new and completely revised preamble that will clarify the scope of the NAIC accreditation standards, including their proposed applicability to XXX/AXXX, variable annuities and long term care reinsurance.
The NAIC committee has stated that the revision has been undertaken “in order to provide both clarity and accuracy to the proposed revisions”.
The current preambles have been gradually added-upon and revised over the years to the extent that the NAIC states it is “difficult (if not impossible)” to simply add a section on multi-state reinsurers that both “adequately and transparently” addresses the proposed revisions.
The NAIC have directed the committee to provide a draft of these proposed revisions to the chair of the committee for exposure prior to year-end 2014.
Many have claimed that the original revision is overly broad and the language is imprecise, as it states: “A multi-state reinsurer is an insurer assuming business that is directly written in more than one state and/or in any state other than its state of domicile. This includes but is not limited to captive insurers, special purpose vehicles and other entities assuming business”.
This definition would sweep in numerous alternative risk structures that have nothing to do with life reinsurance, including some captives that operate on a direct basis, which has drawn industry opposition.
The Captive Insurance Companies Association, most notably, claimed that the adoption of the proposed accreditation standards would cause severe damage to the captive insurance industry and also that “no bases have been put forward as to why the proposal should apply to the entire captive industry”.
