News Release

The NAIC Report    2000 Spring National Meeting
Chicago, Illinois
March 11 – 15, 2000

State insurance regulators convened for the 162nd meeting of the National Association of Insurance Commissioners (NAIC) at its 2000 Spring National Meeting at the Chicago Hilton & Towers in Chicago, Illinois.

  Highlights of the Spring meeting include:

Ø      Members approve a blueprint outlining goals for state insurance regulation called “Statement of Intent: The Future of Insurance Regulation;”

Ø      Nine new working groups are established to implement the Gramm-Leach-Bliley Financial Services Modernization Act;

Ø      Kansas, Michigan and Minnesota Departments of Insurance receive SR 2000 recognition;

Ø      Members of the Consumer Board of Trustees for 2000 are named;

Ø      Members adopt the white paper, Regulatory Access to Insurer Information: the Issues of Confidentiality and Privilege;

Ø      Members approve Office of Thrift Supervision information-sharing agreement structure;

Ø      Members adopt an issues paper on the sale, delivery and service administration of  insurance products and services using electronic means;

Ø      Market Conduct and Consumer Affairs (D) Subcommittee adopts a white paper on consumer complaints;

Ø      Financial Services Modernization Task Force takes action on privacy issues.

 NAIC Approves Blueprint for Future of Insurance Regulation

Members of the National Association of Insurance Commissioners (NAIC) approved a blueprint outlining goals for state insurance regulation called "Statement of Intent: The Future of Insurance Regulation" during the Spring National Meeting Opening Session.

"First and foremost, the goal of state insurance regulators is to proactively and aggressively protect insurance consumers.  With the rapid change in financial services brought about by financial services modernization legislation in the United States and a globalization of the marketplace, state insurance regulators are taking steps to modernize insurance regulation," George Nichols III, President of the NAIC and Kentucky Insurance Commissioner, said.

"The Statement of Intent outlines the goals of state insurance regulators in the short term in implementing the Gramm-Leach-Bliley Financial Services Modernization Act.  In addition, it sets the Year 2000 National Regulatory Priorities as the long-term modernization priorities for state regulators.  We are moving aggressively to implement Gramm-Leach-Bliley, and this plan moves state regulation into the next century," Nichols added.

“Forty-eight insurance commissioners have signed the Statement of Intent and three more are still reviewing the final resolution.  This shows that state regulators are unified in our efforts to move state regulation into the next century,” Nichols said.

  Statement of Intent: The Future of

 Insurance Regulation

         Our primary goal is to protect insurance consumers, which we must do proactively and aggressively. We also recognize that consumers as well as companies are well served by efficient, market-oriented regulation of the business of insurance.

             Insurance is unique in the world of financial services.  Historically, insurance markets have developed from state to state reflecting the differences in population, geography, weather patterns and delivery systems. State regulation has addressed that marketplace efficiently and effectively.

           Fueled by enhanced technology and globalization, the world financial markets are undergoing rapid changes. In order to protect and serve more sophisticated but also more exposed insurance consumers of the future, insurance regulators are committed to modernize insurance regulation to meet the realities of an increasingly dynamic, and internationally competitive financial services marketplace.  This will include working with all parties to combat and reduce the incidence of fraud, thereby providing a safer environment for consumers and lower costs.

We pledge to work cooperatively with all our partners – governors, state legislators, federal officials, consumers, companies, agents and other interested parties – to facilitate and enhance this new and evolving marketplace as we begin the 21^st Century.

 I.                  Implementing the Gramm-Leach-Bliley Act

            Proposed Amendments of State Laws

Working with our governors and state legislators, we will undertake a thorough review of our respective state laws to determine needed regulatory or statutory changes to achieve functional regulation as contemplated by the Gramm-Leach-Bliley Act.  Anti-affiliation statutes, licensure laws, demutualization statutes, and various essential consumer protections, including sales and privacy provisions, will be part of this review. We will move forward quickly to both promulgate regulations and suggest statutory changes to facilitate implementation of the new law.

 Streamlined Licensing for Producers

We are committed to uniformity in producer licensing and will work to implement effective uniform producer licensing standards.  As a necessary interim step, the NAIC adopted the Producer Licensing Model Act for consideration by state legislatures. This Model Act provides specific multi-state reciprocity provisions to comply with the requirements of the Gramm-Leach-Bliley Act.

While reciprocity is a short-term answer, uniformity is the efficient, long-term solution. As a result, we have empowered the NAIC’s non-profit affiliate Insurance Regulatory Information Network (IRIN) to develop recommendations for a streamlined, national producer licensing process that will reduce the cost and complexity of regulatory compliance related to the current multi-state process.  We believe that by leveraging work already done on the Producer Database and the Producer Information Network and by using IRIN as a central clearinghouse for non-resident licensing information, efficiencies will be realized that exceed expectations outlined in the National Association of Registered Agents and Brokers (NARAB) provisions of the Gramm-Leach-Bliley Act.

            Financial Examinations and Reviews of National Companies

We will consider the implications of the Gramm-Leach-Bliley Act on the regulatory authority, focus, and procedures provided by the NAIC Insurance Holding Company System Model Act and accompanying Model Regulation and will recommend changes for consistency with the functional regulatory scheme set forth in the Gramm-Leach-Bliley Act and related federal regulations.

Building on initiatives already underway, we will review our financial reporting and financial analysis and examination processes in light of the new law and changes occurring in the market place.  We will refine our risk-based approach to examining the insurance operations of financial holding companies to place greater emphasis on a company’s unique risk exposures and how it manages those risks.

We will recommend mechanisms to enhance communication and coordination among all functional regulators, and we will review the role of the NAIC resources in supporting such communication and coordination.

We will pursue development of a group-wide approach to regulating insurer groups and enhancing coordination among states.  As a part of this initiative, we will consider consolidated financial statements for the insurance operations of groups.

             Implementing Functional Regulation and Sharing Regulatory Information

We will continue to use the NAIC process for the development of model agreements, and we will build on our progress to date.  We will actively encourage the execution of information sharing agreements between the individual states and each of the key federal functional regulators.

In addition, we will develop a comprehensive agreement for the sharing of information among states.

The NAIC adoption of the model confidentiality law provisions demonstrates its commitment to break down barriers to sharing information between the States.  We will work with state legislators to support such confidentiality legislation. We will pledge to form coalitions with interested parties to promote uniform and consistent enactment of the confidentiality provisions.

II.              Year 2000 National Regulatory Priorities

“Speed to Market”

Working with our governors and state legislators, we will take steps to improve speed to market for insurance products. This will include development and implementation of a system of deference to the state of domicile using one-stop filing for products issued on a multi-state basis, where appropriate. To support this system, we will develop and implement state-based uniform standards for policy form and rate filings for appropriate product lines. In pursuing this evaluation, we will keep in mind the need for flexibility to allow local treatment of conditions produced by local markets.  For lines that do not lend themselves to uniform standards, we are committed to reviewing market barriers for further efficiencies. We will take steps to shift the focus of states away from a prior approval system, where appropriate.  We will also develop an e-repository for filings, a system for tracking data, and a state certification process. 

Regulatory Re-engineering

The benefits of uniform regulatory procedures for insurers selling products to large, sophisticated commercial policyholders are compelling. Many states have adopted and are implementing laws to re-engineer their commercial lines regulatory functions.

We will evaluate the progress of specific states with respect to commercial lines reform, and compare those actions with the Property and Casualty Model Rate and Policy Form Law.  Based on this evaluation, we will consider amending the Model and taking other appropriate steps to achieve greater uniformity and consistent application of rate and form requirements with our members.

We will continue to explore avenues to reduce unnecessary requirements for policies sold to insurance purchasers with insurance knowledge and market power. Where appropriate, we will explore increased reliance on the benefits of open competition.

Market Conduct Reform

Market conduct is an essential regulatory tool.  Its importance to regulators, producers and consumers will increase as the “Speed to Market” reforms are implemented and the marketplace evolves. 

We will examine the current focus, structure and implementation of market conduct programs in the states to identify the issues and concerns that currently exist in this area.  This examination will help us determine the merits of voluntary uniform national standards as a basis for market conduct examinations and enforcement actions. In pursuing this evaluation, we will keep in mind the need for flexibility to allow local treatment of conditions produced by local markets.

Facilitating Electronic Commerce that Protects Consumers

The insurance-buying public and industry must be allowed to benefit from the broad range of opportunities that e-commerce offers.  As a result, we adopted the recommendations of the Electronic Commerce and Regulation Working Group and endorsed the Uniform Electronic Transactions Act (UETA) for consideration and enactment in each of the states. As e-commerce evolves, we will continue to identify necessary reforms that will facilitate e-commerce while maintaining important consumer protections.

Treatment of National Insurance Companies

We are committed to exploring all options that could offer greater uniformity within the state-based system of insurance regulation. 

An initial step toward this streamlined system is already available through the Accelerated Licensure Evaluation and Review Techniques (ALERT) program, which is a streamlined insurer licensing procedure.  We will encourage all states to join ALERT and initiate use of the newly developed expansion application process.  This will allow streamlined admissions for those companies already admitted in one ALERT state simply through the filing of an expansion application in another ALERT state.  The expansion application process introduces elements of reciprocal reliance on the more detailed work of the state reviewing the complete application.  We will pursue development of an e-repository for company applications to facilitate one-stop filing.

In addition, we will evaluate the broad range of regulatory issues and concerns and develop a proposal for a state-based system that could provide the same efficiencies as a federal charter for insurance companies.

NAIC President George Nichols III Addresses Opening Session

The following excerpt was taken from NAIC President and Kentucky Commissioner George Nichols’ remarks during Opening Session of the Spring National Meeting in Chicago on Monday, March 13, 2000.

These are just a few words that express how I feel about 48 states signing the Statement of Intent for the Future of  Insurance Regulation — wow, excitement,  energy,  focus,  direction and success! This signing is a very, very powerful message. This will put us on the path to what we need to do.

I have wanted since yesterday, when we already had 46, to go around and high-five as if the Chicago Bulls had won another championship.  I’ve wanted to pump my fist in the air just like Tiger Woods.  And for you James Brown fans, I have wanted to “jump back and kiss myself,”  because I really feel positive about where we are going and the statement that we are making to everyone.

Now I say these things to bring it all into perspective.  This is an important moment, and I think it’s important that we stop and reflect because we have truly achieved something great, and we’ve done that together.  Who in the world would have expected the NAIC to make a bold statement, to get 48 states to sign, to develop a structure, to outline time frames, to request partnership from all of our constituents to share with us and give us input into where we go for the future? I ask our partners,  are you ready for the new NAIC?

Now there will be nay-sayers, people trying to pick at every word that we say, every word that is in the document, every meeting that we have, everything that we produce.  We will be evaluated at the highest standard.  We will be expected to be perfect in an imperfect world. Every missed step that we run across will be followed by “I knew they could not pull it off, they’re history.”

People are already saying if it weren’t for S. 900, they wouldn’t do this. If it weren’t for NARAB, if it wasn’t for the threat of federal regulation, if it wasn’t for the discussion of a dual charter, if it wasn’t for the changing dynamics in the marketplace, if it wasn’t for technology or the global economy we wouldn’t be doing this. Well, guess what? We admit it!  Those things had a reason for leading us to do what we did, so now I would like to move on because we are less concerned by the things that happened that got us here and more concerned about where we go from here and that we insure that we as an organization will be around and be strong enough for the next event or issue. 

When you played basketball and went in for a lay-up and the other team had a person there to take the charge and you missed, the coach would take you out of the game. He would say to you,  “You know you are gonna foul, but you never ever take you eyes off the goal because the priority is that you score.”  That is what we are going to do.

 We will always keep our eye on the goal, and if we foul we still will score the basket.  For all those waiting to take the charge on us, you will be beat. Because if our team loses, consumers lose, companies lose, agents lose, our states lose, the business of insurance loses. So, it is important that we are successful at our objective. 

Soon this day will move on as a faint memory but its implications will not.  As in life, we will use the euphoria of this day because our work must begin and that work will be difficult. We will fight, we will argue and at times we will seem like a dysfunctional family, but I have learned that even dysfunctional families survive, strive and grow. And we will, too.

You know that I like to use movies in my speeches, and I wouldn’t want to disappoint you.  In Seattle in 1997 it was the Emerald City, “The Wizard of Oz.” We referenced bank and bank regulators as the wicked witch of the West or of the East, I’m not sure.

In San Francisco, I talked about “It’s A Wonderful Life” and shared with you the impact that we as a group have made on the business of insurance and insurance by consumers. Given the challenge we had in developing a Statement of Intent, I was reminded of what my mother always told me, “ If you love sausage, never watch it made because you’ll stop eating it.” Keeping with the movie theme, I couldn’t find just one movie that would bring all this together for us, so I had no choice but to go to several.  But I wanted to share with you some thoughts of some movies that I have about where we are at. 

         We have felt the pressure just like the pressure that was felt in the movie  “High Noon” because Amy didn’t want us to go back into town to be the sheriff. She thought we should just stay home, but we knew that we had a responsibility to go and defend the city, and there we went. 

           Now we will try to think about how we will be remembered, and our concern is that people not look upon us “Of Mice and Men,” and definitely we do not want to refer to us as “Cat On  A Hot Tin Roof.”  I know that there are people out there who believe that the goal of uniformity in our terms may be a “Street Car Named Desire.” We do face the many challenges of building consensus.  I’ve been in a room with two other commissioners when we’ve had six ideas, but that’s okay. The “Three Faces of Eve” was a good movie, and “Close Encounters of the Third Kind” I was comfortable with. 

           But if we fail to do our job, what could happen?  It could be “Gone With the Wind” and they could replace us with “One Who Flew Over The Cuckoo’s Nest”! And he would operate like a “Psycho”!  But I don’t want us to look back in “The Rear Window,” and I don’t want us to think we are an unsinkable ship because the “Titanic” did indeed go down. 

           What I want us to focus on is building a “Field of Dreams” because in San Francisco we started out developing a Statement of Intent. In Phoenix, we were able to bring that more into focus, and over the past 30 days we have actually brought it to reality.  This will serve as seeds for our field and will allow us to play ball on behalf of our team, consumers, companies, agents, our states and more importantly the overall business of insurance. So I ask you to join with me from the Statement of Intent to the work of building the field.  Let’s go play ball.

NAIC Working Groups Set to Implement Gramm-Leach-Bliley,
Set Regulatory Priorities

Members of the National Association of Insurance Commissioners (NAIC) established nine new working groups to implement the Gramm-Leach-Bliley Financial Services Modernization Act and to set regulatory priorities for the future. The action came during the Association's Spring National Meeting.

"The world's financial markets are undergoing rapid change fueled by increasing reliance on technology, the globalization of the marketplace and changes in United States financial services laws.  State insurance regulators are moving ahead aggressively to implement the changes embodied in the Gramm-Leach-Bliley Act and to set our regulatory priorities in this new financial marketplace. The establishment of these working groups will help us design a blueprint to achieve those goals," George Nichols III, NAIC President and Kentucky Commissioner of Insurance said.

The Working Groups, a brief description of responsibilities and the leadership of the groups follows.

Kansas, Michigan, Minnesota Reach SR 2000 Goal

Three states were recognized for successfully implementing all 11 technology-based initiatives in the State Regulation 2000 (SR 2000) program. The Kansas Department of Insurance, the Michigan Insurance Bureau and the Minnesota Department of Commerce were recognized by the National Association of Insurance Commissioners (NAIC) in conjunction with the Association’s Spring National Meeting.
           Today’s recognition brings the total number of states to have completed implementation of the program to 10. Arkansas, Missouri, Colorado, North Dakota, Iowa, Indiana and Ohio achieved their awards in 1999. 
          SR 2000 is a series of aggressive initiatives developed and supported by state regulators to streamline, strengthen and enhance state regulation. SR 2000 offers state regulators new regulatory tools to improve their ability to regulate the $820 billion insurance industry and to eliminate licensing and approval barriers in multiple states.
         “Obviously the states are giving implementation of these initiatives a high priority,” said George Nichols III, NAIC President and Kentucky Insurance Commissioner. “In fact, we are at 64% toward 100% compliance for all 55 states and U.S. Territories in the SR 2000 program.  What’s more, 72% of those 55 jurisdictions are more than half way toward completing all 11 initiatives.
          “This is a tribute to the strength of state regulation,” said Nichols. “Regulators and consumers benefit from the increased efficiency the State Regulation 2000 initiatives bring to the state departments. We’ve made a good start to improving regulation in the new millennium.
         “Kansas has been a leader in the SR 2000 endeavor with the significant contributions made by Commissioner Kathleen Sebelius and her staff,” said Nichols.  “I am proud to present them with this award. 
         “Michigan is the ninth state to achieve the goal of completing all 11 SR 2000 initiatives,” Nichols stated. “This is an outstanding achievement for Commissioner Frank Fitzgerald and his staff, who have been leaders on many technology issues facing state regulation.
         “It is a special honor for me to present Minnesota with the SR 2000 award,” said Nichols.  “They have been diligent in meeting all the requirements for these initiatives and deserve to be recognized for their hard work.” 

 Working Group Holds Public Hearing on Privacy

The National Association of Insurance Commissioners’ (NAIC) Privacy Working Group of the Financial Services Modernization (G) Task Force held a public hearing to discuss the Consumer Privacy Provisions of the Gramm-Leach-Bliley Act. The hearing was held in conjunction with the Spring National Meeting.

The session provided an opportunity for members to exchange views on the approach that the states should take with respect to the consumer privacy provisions under the Gramm-Leach-Bliley Act and to hear comments from interested parties.

“We are committed to protecting the privacy of consumers under this new law,” said Kathleen Sebelius, NAIC Vice President, Kansas Insurance Commissioner and chair of the Working Group. “This hearing was a valuable opportunity for regulators to receive information on privacy  issues as we discuss the best course of action.”

The Privacy Working Group was created by NAIC President George Nichols III in December 1999 in response to the enactment of the Gramm-Leach-Bliley Act to give high priority for protecting the privacy of consumers in their dealings with insurers under the new law. The Gramm-Leach-Bliley Act sets May 12, 2000, as the deadline for adopting final privacy regulations mandated in the Act.

Title V of the Act sets forth a number of specific consumer privacy protections that federal and state agencies must implement in their role as functional regulators of financial institutions. Generally, the Act directs appropriate regulatory agencies to establish standards covering administrative, technical and physical safeguards that will be followed by financial institutions holding personal financial information provided by consumers. The purpose of such regulatory standards is to ensure the security and confidentiality of consumer information, including protections against anticipated threats or unauthorized access "which could result in substantial harm or inconvenience to any customer."

Implementation of Gramm-Leach-Bliley Act, Privacy Discussion Highlight NAIC Industry Liaison Committee Meeting

            Implementation of the Gramm-Leach-Bliley Act (GLBA) and a general discussion of the privacy of consumers’ financial information were the two primary topics during the NAIC’s Industry Liaison meeting at the Spring National Meeting.

        State regulators outlined the reasons for establishing nine new working groups to implement the GLBA and to plot the course for the future of state insurance regulation.  The Working Groups established reporting to the Financial Services Modernization Task Force are NARAB, Consumer Protections, Definition of Insurance, Privacy, and Coordinating with Federal Regulators.  Working Groups reporting directly to Executive Committee are Speed to Market and National Treatment of Insurance Companies.  The new Market Conduct Issues Working Group reports to the Market Conduct and Consumer Affairs Committee.  The Financial Services Holding Company Analysis/Examination/Review Working Group reports to the Financial Condition Committee.

            The working groups have various deadlines to meet.  Generally, the working groups will provide a completed work product by December 31, 2000, but the Privacy Working Group must complete its recommendations before November.

            State regulators said each working group would quickly develop specific timelines and work schedules.  “We have a solid structure with commissioner involvement on each working group, and we will provide an open forum for discussion in each working group,” George Nichols III, NAIC President and Kentucky Insurance Commissioner said.

            Kansas Insurance Commissioner and NAIC Vice President Kathleen Sebelius outlined several issues related to the privacy considerations of GLBA.  A public hearing on privacy issues was held in conjunction with the Spring National Meeting. Commissioner Sebelius said general comments were that any recommendation from state regulators should be timely, consistent and provide guidance to the industry. 

Funded Consumer Representatives Named

The National Association of Insurance Commissioners has named members of the Consumer Board of Trustees for 2000.  Current and former members of the Board met in Chicago for orientation during the Association’s Spring National Meeting.

“Being a consumer representative gives me an opportunity to present consumer concerns to the NAIC and to work with the members in their decision-making process,” said Bonnie Burns, California Health Advocate and member of the Board.  “Board members keep the NAIC updated on consumer issues and have direct access to state insurance regulators at NAIC meetings.”

“The Funded Consumer Representatives are an important part of our national meetings.  This forum gives us the opportunity to share important information on a variety of consumer issues.  Our primary goals as state regulators are to protect consumers and help maintain a strong insurance industry.  Our meetings with the Funded Consumer Representatives are a significant tool in keeping us informed,” NAIC President and Kentucky Insurance Commissioner George Nichols III said.

Members of the 2000 Consumer Board of Trustees are:

ü                 Sonia L. Alleyne, Director of Community Investment, Massachusetts Affordable Housing Alliance, Dorchester, Massachusetts – As Director, Ms. Alleyne manages all facets of Alliance programs, including legislative campaigns surrounding Insurance Community Reinvestment, negotiations for discounts for the HomeSafe Initiative, coordinates the Fair Housing/Fair Lending Conference and participates on the Federal Reserve Bank of Boston task group on appraisals and insurance issues.  Ms. Alleyne received her Bachelor of Science Degree in Arts and Sciences with a major in Economics and minor in Political Science.  She will complete her Masters Degree in Public Administration from Suffolk University in 2001.

ü                 Joe Baker, Executive Vice President, Medicare Rights Center, New York, New York. – Mr. Baker’s current responsibilities as Executive Vice President of the Medicare Rights Center include contract administration with state and private entities, supervising all casework of staff and volunteers, analyzing health care policy issues, managing governmental relations, drafting educational materials and conducting public education, as well as assisting with day-to-day management activities.  Mr. Baker received his Juris Doctorate from the University of Virginia School of Law and his Bachelor of Arts in English Literature also from the University of Virginia.

ü                 Birny Birnbaum, Consulting Economist, Austin, Texas – Mr. Birnbaum has provided consulting expertise on such issues as creditor-placed credit insurance, credit insurance abuses, intergovernmental risk pools, automobile insurance available and insurer redlining, and risk automobile insurance rates.  Mr. Birnbaum received his Master’s Degree in Business and Urban Planning from the Massachusetts Institute of Technology and his undergraduate degree in German and Political Economy from the Wesleyan University Program in Germany, Bonn, West Germany.

ü                 Brendan Bridgeland, Center for Insurance Research, Medford, Massachusetts – Mr. Bridgeland’s past experience includes positions as Policy Director and Legal Analyst with the Center for Insurance Research.  His responsibilities have included planning and implementing Center activities such as research, policy statement, participating in regulatory matters and consumer education.  He has also contributed research and writing to an article on consumer interests in mutual insurance holding companies published in the Journal of Insurance Regulation.  Mr. Bridgeland received his Bachelor of Arts in History and Writing Seminars from The John’s Hopkins University.  He plans to complete his Juris Doctorate from the Boston University School of Law in 2000.

ü                 Bonnie Burns, Consultant and Consumer Advocate, California Health Advocates, Scotts Valley, California – Ms. Burns is a consultant and consumer advocate with experience in Medicare, Medicare supplement insurance, long-term care insurance, and managed care issues, working with county and state counseling programs that assist seniors regarding these issues.

ü                 Pamela J. Brynes, Community Health Consultant, Niantic, Connecticut – Dr. Byrnes has extensive health care policy experience at both the state and federal level having assisted numerous state and community agencies in analyzing the health care legislative environment and developing strategic initiatives.  Much of her recent work centers on managed care systems and developing innovating affiliations between community-based primary care and institutional providers.  Dr. Byrnes received her Ph.D. in the Sociology of Health Care from the University of Connecticut.  She has a Masters of Science in Applied Statistics, Research, Measurement, and Evaluation and a Bachelor of Science in Sociology and Secondary Education from Southern Connecticut State University.

ü                 Brenda J. Cude, Professor and Department Head, Department of Housing and Consumer Economics, University of Georgia, Athens, Georgia – Dr. Cude brings a wealth of experience in consumer economics to the NAIC Consumer Board of Trustees.  Dr. Cude has done extensive research on such topics as protecting your home environment, liability insurance and family day-care providers, environmental issues, and discrimination in insurance.  She received her Ph.D. in Consumer Economics from Purdue University, her Masters of Science in Economics and Management and Bachelors of Science in Home Economics Education from the University of Tennessee at Martin.

ü                 Patricia DeMichele, Executive Director, Louisiana Health Care Campaign, Baton Rouge, Louisiana – As Executive Director, Ms. DeMichele develops and manages all programs, services and activities of the Louisiana Health Care Campaign, a coalition of more than 65 community and religious organizations dedicated to achieving affordable, comprehensive health care for all Louisianians.  Ms. DeMichele received her Juris Doctorate from the University of Utah Law College and her Bachelor of Arts from the University of Utah.

ü      J. Robert Hunter, Director of Insurance, Consumer Federation of America, Washington, D.C. - Mr. Hunter serves as Director of Insurance for the Consumer Federation of America, as well as a consultant public policy and actuarial issues.  Mr. Hunter has a wealth of experience in the insurance industry, having served the State of Texas as Commissioner of Insurance, the Federal Insurance Administration as Administrator and Chief Actuary, and having worked for many years in the private sector as an actuary and underwriter. 

ü                 Karroll Kitt, Associate Professor of Family Economics, Association for Financial Counseling & Planning Education (Ohio), The University of Texas at Austin, Austin, Texas – Dr. Kitt’s experience in Family Economics and Financial Planning includes research in areas such as Long-Term Care Insurance, Disability Income Insurance, Consumer Satisfaction with Prescription Drug Counseling, and Employee Decision Making Factors Regarding the Selection of Health Benefits.  Dr. Kitt received most recent designation as Certified Financial Planner from the College of Financial Planning, Denver.  Dr. Kitt received her Ph.D. in Family Economics & Management from Purdue University, her Masters of Science in Family Economics and Bachelors of Science in Home Economics Education from the University of Nebraska.

ü                 Brian Lindberg, Executive Director, Consumer Coalition for Quality Health Care, Washington, D.C. – Mr. Lindberg’s responsibilities as executive director include overall coordination and management of the Consumer Coalition, a diverse group of health care consumer organizations representing more than 30 million Americans.  The Coalition advocates for health care reform legislation that provides meaningful consumer information, strong due-process protections, a consumer advocate program, and a system for independent quality oversight.  Mr. Lindberg received his Master’s Degree in Management of Human Services from Brandeis University.  He participated in an Independent Study in Social Sciences at the University of Stockholm International Graduate School.  Prior to his study abroad, Mr. Lindberg received his Bachelor of Social Work from Temple University.

ü                 Maureen O’Connell, Managing Attorney, Legal Services Advocacy Project, St. Paul, Minnesota – As Managing Attorney of the Legal Services Advocacy Project, Ms. O’Connell manages the activities of attorneys and advocates who represent low-income people on legislative and administrative issues in the areas of health care, welfare reform, family law, housing, taxes and consumer law.  Ms. O’Connell received her Juris Doctorate from William Mitchell College of Law and her Bachelor of Arts in Economics from the College of Saint Catherine.

ü                 Erica Wood, Associate Staff Director, American Bar Association Commission on Legal Problems of the Elderly, Washington, D.C. – Ms. Wood has worked with the Commission in various capacities, most recently as Staff Director.  Her primary responsibilities include activities such as providing technical assistance on provision of legal resources for the elderly, addressing issues of adult guardianship and examining applications of dispute resolution for older persons.  Ms. Wood received her Juris Doctorate from George Washington University, National Law Center and her Bachelor of Arts from the University of Michigan.

NAIC Adopts White Paper – Regulatory Access to Insurer Information: the issues of Confidentiality and Privilege

In action during their Plenary session, the National Association of Insurance Commissioners (NAIC) adopted the white paper, Regulatory Access to Insurer Information: the Issues of Confidentiality and Privilege, in conjunction with the Association’s Spring National Meeting. 

The white paper, which was adopted by the Special Insurance Issues (G) Committee at the NAIC Winter National Meeting, addresses the issues of regulatory access to insurer documents that insurers maintain and protecting the confidentiality of those documents.  A fundamental concern is the interplay between regulatory access and third-party access through public records laws, litigation discovery and other means.

“This paper focuses on regulatory access to insurer information and does not attempt to address the many additional issues that relate to public access to insurer data,” said John Oxendine, Georgia Commissioner of Insurance and Chair of the Special Insurance Issues (G) Committee.  “I am pleased with the cooperative efforts of the industry in coming to agreement on areas of concern.”

 The white paper reviews issues related to attorney-client privilege, attorney work product, trade secret, self-critical analysis and similar topics.  The review focuses on court decisions, the position taken in NAIC model laws, and state practices and positions.  The paper includes conclusions and recommendations and several appendices of helpful information.

A copy of the white paper can be obtained by contacting the NAIC Publications Department at (816) 783-8300.

NAIC Approves Office of Thrift Supervision Information Sharing Agreement Structure

Members of the National Association of Insurance Commissioners’ (NAIC) Financial Services Modernization Task Force approved an information-sharing agreement framework with the Office of Thrift Supervision (OTS) during the association’s Spring National Meeting.

The agreements were approved during Plenary Session at the NAIC’s Winter National Meeting in San Francisco last December pending review and approval by the Financial Services Modernization Task Force. This action clears the way for state departments of insurance to begin signing separate agreements.

“Previously, we worked with the Office of the Comptroller of the Currency (OCC) to sign consumer complaint information sharing agreements.  At this time, more than half of the states have signed separate agreements with the OCC.  The draft agreement approved is a broader regulatory cooperation agreement.  It is the next, logical step in the ongoing efforts of state insurance regulators to implement functional regulation,” NAIC President and Kentucky Insurance Commissioner George Nichols III said.

 “These agreements are a significant, historic step between state and federal regulators to strengthen our relationship in the new world of financial services modernization,” Nichols added.

The agreement outlines guidelines for sharing information on the financial solvency, the insurance activities and the thrift activities of a regulated entity.  In addition, the agreement calls for sharing complaint and consumer inquiry information of regulated entities and enforcement actions.  The agreement also calls for strict confidentiality of information.  Nothing in the agreement restricts, enlarges or otherwise modifies the respective jurisdiction of the respective state department of insurance or the OTS.

 NAIC Adopts Electronic Commerce and Regulation Issues Paper

In action during their Plenary Session, members of the National Association of Insurance Commissioners (NAIC) adopted an issues paper on the sale, delivery and service administration of insurance products and services using electronic means.  The action came during the Association’s Spring National Meeting.

The paper is the result of the Electronic Commerce and Regulation Working Group’s charge to evaluate methods by which the Internet and other means of electronic commerce can be used to increase efficiencies in the regulations of insurance.  The working group was charged with developing specific recommendations to update and, where appropriate, harmonize state laws, regulations and procedural requirements governing the insurance industry.

“Our goal was to preserve consumer protections while moving forward in the area of electronic commerce,” said George Nichols III, NAIC President and Kentucky Insurance Commissioner. “We have succeeded in meeting this goal.”

“We’ve made the first step toward developing a self-assessment tool for states to use in evaluating their laws, regulations and procedures in this area,” Nichols said.

The issues paper defines electronic commerce as a broad category of activities that allows goods and services to be selected, purchased, received or serviced using, in all or part, electronic- based technologies. In addition to defining electronic commerce, the issue paper discusses several subject areas and provides insight into ways that states can change their laws, regulations, processes and procedures while preserving important consumer safeguards.

In addition, the issues paper contains a section where issues are analyzed and the working group provides a consensus “best practice” recommendation to address the issue.  Areas that are explored include countersignature requirements and other non-resident solicitation restrictions; signatures and electronic authentication; delivery, format and proof of coverage; electronic payments; records retention; disclosure of license status; and advertising.

Financial Services Modernization Task Force Takes Action on Privacy Issues

The National Association of Insurance Commissioners’ Financial Services Modernization (G) Task Force decided to submit comments in response to the Graham-Leach-Bliley (GLB) Consumer Privacy Provisions at the Association’s Spring National Meeting.

In discussions led by Kathleen Sebelius, NAIC Vice President, Chair of the Privacy Working Group and Kansas Commissioner of Insurance, members agreed to draft initial comments to the Federal Privacy Regulations in response to three issues:

Issue One: Defining Nonpublic Information – Federal agencies have proposed that GLB’s express statutory protection of a consumer’s “nonpublic personal information” mean that any information collected through the private business operations of a financial firm be considered nonpublic information, even if some of that information could be found elsewhere publicly.

Issue Two: Consumer “Opt-Out” Procedures – GLB requires that consumers be given a fair opportunity to opt-out of having their nonpublic personal information shared with non-affiliated third parties.

Issue Three: Clarifying the Scope of Federal Privacy Regulations – The privacy regulations proposed by federal agencies expressly include state insurance authorities in the list of regulators applying federal regulations, even though federal privacy regulations will not apply to insurance providers and state insurance regulators will have no role in enforcing federal rules.

“As state regulators, we have an obligation to establish privacy regulations for the insurance industry,” said Sebelius.  “We have an obligation to protect consumers.” 

A response to Federal Privacy Regulations will be submitted by March 31 to the Federal Reserve Board, Comptroller of the Currency, Federal Deposit Insurance Corporation, and other Federal functional regulators issuing the proposed rules for public comment.  The task force encourages all interested parties to submit their comments as soon as possible for consideration in drafting this response.  An interim meeting of the task force will be scheduled in the April timeframe to continue discussions on issues relating to Federal Privacy Regulations.

Committee Adopts White Paper on Consumer Complaints

Members of the National Association of Insurance Commissioners Market Conduct and Consumer Affairs (D) Committee adopted a white paper on consumer complaints during the Association’s Spring National Meeting.

The white paper addresses handling of consumer complaints by insurance departments, including recommendations for features of an effective complaint-handling process.  The white paper presents an accumulation of ideas, guidelines and established practices that can be used by states to evaluate or enhance their current procedures.

“This paper identifies ‘best practices’ for handling consumer complaints so that states may enhance their internal complaint-handling process,” said George Nichols III, Kentucky Commissioner of Insurance and NAIC President.  “We believe this effort supports our mission to  ‘facilitate the fair and equitable treatment of insurance consumers’ by placing additional focus on consumer concerns.”

A copy of the white paper can be obtained by contacting the NAIC Publications Department at (816) 783-8300.

 Health Insurance (B) Task Force Discusses Patient Protection Legislation

A conference committee has been established to resolve the differences between the House and Senate versions of the patient protection legislation before Congress.  The conferees have met twice, but very little progress has been made.  The key issues that will be debated in conference are the scope of the bill, health plan liability and the "access" provisions. The House and Senate Republican leaders want a bill out of conference by the end of March and to the President by the Easter recess in mid-April.  This appears to be highly unlikely. The NAIC has developed materials identifying key consumer-protection issues that are critical to the states for the NAIC members to use to get their governors and state legislators involved in the process.

The NAIC submitted a comment letter on the Department of Health and Human Services (HHS) proposed health information privacy regulation.  HHS is currently reviewing the 50,000 comment letters it received, but there is no target date for the publication of the final regulation.  The NAIC also submitted the comment letter as written testimony for the House Ways and Means Health Subcommittee hearing on the HHS proposed regulation that was held February 17, 2000.  The Senate Health, Education, Labor and Pensions Committee has scheduled a hearing on the proposed HHS regulation for March 30, 2000.

The task force also discussed the Medigap prescription drug legislation currently before Congress. These proposals are part of the broader Medicare reform debate.  Since it has been 10 years since legislation was passed implementing this federal/state system, the Health Insurance Task Force approved a motion charging the Senior Issues Task Force to review the 10 Medigap plans and to propose any needed updates to these plans.

The task force received a report about legislation before Congress that would grant an antitrust exemption to independent physicians and would allow them to collectively bargain with health plans during contract negotiations.    

The task force also received a report on the pending Health Insurance Portability and Accountability Act of 1996 (HIPAA) Administrative Simplification Rules. Under HIPAA, HHS was directed to promulgate seven sets of administrative simplification rules establishing requirements that facilitate the electronic maintenance and transmission of health information.

The task force approved a letter submitted by the Senior Issues Task Force and drafted by the National Association of State Units on Aging regarding the Senior Health Insurance Counseling and Assistance Programs (SHIPs).  The letter asks Senator John Breaux to reconsider his bill, S. 1895, which duplicates the efforts of the SHIPs under the current system, and asks him instead to strengthen the role of the existing SHIPs in educating consumers.

 NAIC/HCFA Liaison Committee Discusses Medigap Compare Project

The committee discussed several issues of relevance to both the NAIC and the Health Care Financing Administration (HCFA). HCFA is winding up the process of reviewing state laws to determine if a state is substantially enforcing the various provisions of Health Insurance Affordability and Accountability Act of 1996 (HIPAA). Letters regarding those reviews were sent to the states where HCFA has determined there is a question regarding whether states are substantially enforcing HIPAA's requirements with respect to mental health parity, maternity length of stay and the Women’s Health and Cancer Rights Act.  The committee also heard from HCFA on the plan to begin the triennial review process of state alternative mechanisms under HIPAA. 

The committee was updated on the status of the Medigap Compare project.  For those states that have comparative Medigap information available on state Web sites, there will be a direct link from the Medigap Compare site to the state site, and the Medigap Compare site will not display comparative premium information in those states.  HCFA has not received as much information as it had hoped from insurers during Phase I of the project. The Medicare Supplement Working Group will continue to work with HCFA on furthering the project along. 

The Committee heard that HCFA plans to work with the Senior Issues Task Force in 2000 on updates to the Medicare+Choice Guidelines.

International Accounting Standards Working Group Discusses Draft Letter to the IASC

The working group discussed their first draft comment letter to the International Accounting Standards Committee (IASC) in response to the Insurance Issues Paper. The first draft was prepared by three subgroups of the working group including members of interested parties.

The IASC asked for comments on whether the insurance project should cover all aspects of accounting by insurers or insurance contracts of all enterprises.  The working group decided not to state a specific preference, rather the working group will comment on the advantages and disadvantages of each option in relation to how insurance business is regulated in the U.S.

The working group agreed that it would not currently advocate nor reject fair value accounting for insurance contracts.  The working group also agreed that, theoretically, the measurement basis for an insurer’s liabilities should be consistent with the measurement basis adopted for its assets.  However, the working group also agreed there are circumstances in insurance accounting when such measurements may not work practically. 

The working group noted that the IASC plans to choose either an asset-and-liability approach or a deferral-and-matching approach for recognition and measurement of insurance contracts.  The working group agreed that the asset-and-liability approach may be appropriate conceptually; however, many details of the asset-and-liability approach remain unresolved by the IASC.  The working group agreed not to choose one approach over the other until the details of both approaches are addressed and resolved by the IASC.

The working group agreed to hold a conference call to address the remaining issues of the draft comment letter.  The next phase of the project will include a second draft of the comment letter to be completed by April 21, 2000.  The draft will be circulated to the chairs of the Accounting Practices and Procedures (E) Task Force and the Financial Condition (E) Subcommittee for review prior to the May 31, 2000 comment deadline.

ERISA Working Group of the Accident and Health Insurance (B) Committee Hears Update on Federal Activity

The ERISA Working Group heard an update on federal activity involving ERISA.  The patient protection bill passed by the U.S. House of Representatives includes provisions for Association Health Plans (AHPs), HealthMarts and Community Health Organizations.  AHPs are MEWAs, and those provisions amend ERISA. The NAIC is working diligently to keep those provisions out of any conference report on patient protections, and state insurance commissioners are asked to get their governors involved.  With respect to church plans, there is no further activity to report since the last national meeting.

The working group heard from the Department of Labor that the proposed rule resulting from the 3(40) Negotiated Rulemaking Committee regarding the exception to the definition of a MEWA for plans established or maintained pursuant to one or more collective bargaining agreements was still in the DOL clearance process.  No publication date is known.

The working group heard from DOL on the MEWA registration regulation recently published in the Federal Register.  A new Form M-1 reporting form is part of the regulation.  It is the annual reporting form for MEWAs and certain collectively bargained plans.  The deadline for comments on the rule is April 11, 2000.

International Holocaust Commission Task Force Receives Report on Official Claims Launch

Members of the National Association of Insurance Commissioners International Holocaust Commission Task Force received an update on the results of a news conference on February 15 launching the official claims process.

Ogilvy Public Relations Worldwide was retained to coordinate the NAIC portion of the national news conference and to assist in developing materials.

In addition, each state department of insurance was encouraged to conduct a news conference on the same date.  To assist the departments, a draft media advisory, draft news release, International Commission on Holocaust Era Insurance Claims (ICHEIC) membership list and information on the national news conference were provided.

A national media packet was developed, including a national news release, a summary of the population state-by-state who may be effected by the announcement, a copy of the ad slick used by ICHEIC, a history of ICHEIC, a Frequently Asked Questions document and a list of ICHEIC members.

A national radio network “tour” was undertaken by the NAIC from ABC News studios in Washington, D.C. prior to the news conference. 

A video news release featuring “B” roll footage and an interview with North Dakota Insurance Commissioner Glenn Pomeroy and ICHEIC Chairman Lawrence Eagleburger was fed twice by satellite to television stations across the country.  A package television story with a reporter voice over was also fed via satellite to assist the smallest market television stations.  A radio news release was fed via satellite as well.

There were approximately 148 separate newspaper stories reaching an estimated audience of 38.3 million people. The national radio network tour reached an estimated 7.7 million people in 23 radio markets. The radio news release generated an estimated 868 stories and reached more than 6.9 million people. The video news release generated 27 stories reaching an estimated 1.5 million. The packaged television feed generated approximately 42 separate stories.  It is estimated that the NAIC efforts reach approximately 54.6 million people.

The Task Force then went into Executive Session to hear an update on Commission negotiations.

SHIP/HCFA Partnership Agreement Finalized

          The SHIP Steering Committee gave an update on activities of the SHIP programs. The steering committee has new leadership, Mary Kaye Brown is the new chair and Kathy Claunch and Bob Pierce are new regional representatives for regions 5 and 7 and 6 and 8, respectively.  The SHIP/HCFA Partnership Agreement has been finalized and sent to all the partners.   

The working group reviewed a letter from the SHIP Resource Center to Senator Breaux expressing their concern about demonstration project proposals contained in S.1895.  The working group agreed to sign on to the letter.

With respect to publications, the Senior Counseling Newsletter will be available from the NAIC publications department in late April. Also, the working group is forming an editorial board to review articles for publication.

The 2000 Guide to Health Insurance for People with Medicare has obtained final clearance from HCFA and is expected to go to print the week of March 13^th.

The Medigap training materials, “Medicare Supplement Insurance Regulation Amendments, 1999 Update” had been adopted by the working group on a conference call on February 29^th. 

The working group heard a report by the Medicare Rights Center on their report entitled

“Medicare Rights and Realities: Medigap Consumer Protections Fail.” This report addresses alleged misinformation given to consumers by Medigap carriers regarding their guaranteed issue rights.   

Life and Health Actuarial Task Force Adopts Guideline

      The Life and Health Actuarial Task Force voted to adopt Actuarial Guideline ZZZZ - "The Application of the Commissioners Reserve Valuation Method to Equity Indexed Life Insurance Policies." 

The Task Force voted to expose for comment a revised version of Actuarial Guideline VL-GMDB – “Variable Life Insurance Reserves for Guaranteed Minimum Death Benefits.”  This version incorporates “Option Y” from the previous exposure draft.  Also, the Task Force anticipates that it will revisit the issue of whether to apply the Valuation of Life Insurance Policies Model Regulation (“XXX”) to variable life and universal variable life products.

            The Task Force voted to discontinue work on the project relative to nonforfeiture for equity-indexed annuities.

Members of the Task Force hope to vote on a revised Actuarial Opinion and Memorandum Regulation (“AOMR”) during 2000. Also, the Task Force voted to expose for comment a letter to the states regarding how to interpret the references to the NAIC Examiner Team in the existing AOMR.

Members also discussed the concept of incorporating a “viability analysis” into the existing Standard Valuation Law.  It is anticipated that a conference call will be scheduled to discuss this and other approaches to monitoring a company’s ability to carry out it plan of operations.

Reinsurance (G) Task Force Meets to Develop Charges

            The reconstituted Reinsurance Task Force met for the first time to consider its future direction and to develop specific charges to be recommended to G Committee.  After hearing comments and suggestions from members of the Task Force and other interested parties, it was agreed that the following charges for 2000 and 2001 would be proposed:

·        To monitor and coordinate activities and areas of interest which overlap to some extent the charges of other working groups, specifically the Insurance Securitization Working Group, the Underwriting and Reinsurance Pools Working Group and the International Association of Insurance Supervisors (IAIS) Working Group;

·        To provide a forum for consideration of reinsurance and related issues of public policy;

·        To promote broader understanding of reinsurance and the reinsurance marketplace throughout the regulatory community;

·        To consider the adequacy and appropriateness of currently applicable collateralization requirements regarding alien insurers; and

·        To address other reinsurance-related issues, excepting specific accounting or annual statement reporting matters, as they may arise in the future.

National Treatment of Companies Working Group (EX) Holds First Meeting

The National Treatment of Companies Working Group began defining its purpose and organized future work plans. The working group is an extension of the NAIC Statement of Intent: The Future of Insurance Regulation. The working group will evaluate a broad range of issues and challenges in creating a state-based system that would afford insurance companies the ability to operate on a national basis, with minimal regulatory involvement by multiple states other than the primary state.

The working group members were asked to consider alternatives for creating a national regulatory system, controlled by the states, and related issues that would need to be addressed. To elicit these comments, a letter will soon be released to the public and fellow insurance regulators. Members of the NAIC staff were asked to research a number of possible frameworks for implementing such a national system, as well as the status of relevant NAIC initiatives and projects. The working group was asked to focus primarily on those areas that are not part of other NAIC working groups, but to coordinate with such working groups as they impact the direction and decisions of the working group. The working group envisions the development of a working document by the Summer National Meeting in Orlando, Florida, which would reflect regulatory and industry feedback and the analysis results of NAIC staff assignments.

Interested parties should contact Jeff Johnston or Caroline Scott at the NAIC Executive Offices in Kansas City for inclusion in the working group’s deliberations and work process.

IID (International Insurers Department) Plan of Operation Review Group of Amends the Plan of Operation

The International Insurers Department Plan of Operation Review Group amended the Plan of Operation to incorporate a liability-based trust fund minimum standard for companies. This has been debated for more than six years at the NAIC and is a requirement of the NAIC’s Non-admitted Insurance Model Act. Subsequent upon two major states adopting this liability-based standard, the Review Group unanimously agreed to recommend to the Surplus Lines Task Force that similar standards be incorporated into the IID Plan of Operation. As a consequence, the listing standard for company trusts would be a trust fund minimum amount of $5,400,000 plus 30% of gross U.S. surplus lines liabilities for policies written on or after January 1, 1998.

Additionally, the group recommended a change to the NAIC standard form trust agreement to clarify that companies that have withdrawn from the NAIC’s Quarterly Listing of Alien Insurers remain obligated to provide an actuarial determination of their surplus lines liabilities during the pendency of their trust agreement. Trusts must generally remain in force for at least five years after withdrawal from the list.

The group also continued its discussions regarding the possibility of allowing a surety bond to constitute the funding of an NAIC Standard Form Trust Agreement and agreed to send further questions and requests for clarification on this idea to the Surety Association of America.

Consumer Protection Rules Working Group of the Financial Services Modernization (G) Task Force Holds First Meeting

The Consumer Protection Rules Working Group met for the first time on March 12, 2000. Members stressed the need for a process that is open, collaborative and inclusive for the working group to accomplish its charges. The working group will focus on the 13 “safe harbors” contained in Title I of the Gramm-Leach-Bliley Act (GLBA) and efforts to coordinate state consumer-protection regulation of banks selling insurance products with federal regulators as described in Title III of the GLBA. Other elements of consumer protection will also be considered.

During its meeting, the working group established an initial deadline of March 31, 2000, for preliminary written comments. The working group plans to use the early comments to help focus its efforts and to refine its vision with regard to a final work product. Interested persons were asked to forward written comments by e-mail to Eric Nordman at the NAIC Executive Headquarters. Mr. Nordman’s e-mail address is enordman@naic.org. The written comments will be assembled for consideration by the working group.

The working group expects to convene by conference call after March 31, 2000, well before the NAIC 2000 Summer National Meeting. Details will be forthcoming at a later date and posted on the NAIC Web site. The working group also plans to contact and meet with the appropriate federal regulators to discuss federal rulemaking efforts with regard to consumer protection.

Home Service Working Group Revises Definition of Home Service Marketing Distribution System

The Home Service Working Group met to further revise the Home Service Disclosure Model Act.  The definition of “Home Service Marketing Distribution System” was extensively debated, and the working group affirmed its intent to include in the definition of home service marketing distribution system products for which the premiums are collected via a bank draft. The working group also walked through the draft model section by section and considered comments submitted by interested parties while soliciting additional comments.

A revised model will be created and distributed for comment.  Comments will be accepted on the revised model until April 7 with a conference call tentatively scheduled to review comments on April 13, 2000.

Agent Licensing Working Group of the Market Conduct & Consumer Affairs (D) Committee Discusses Limited-Lines Licensing

The working group discussed that their immediate focus will be on establishing uniform guidelines for limit-lines licensing. The working group believes there must be more standardization among limited-lines licensing to help ensure reciprocal licensing for limited-lines licensing will work. The working group reviewed general discussion language and received general comments from several regulators regarding their regulatory framework for limited-lines licensing.  The working group will recommend a specific charge on this issue to the Market Conduct & Consumer Affairs (D) Committee at the D Committee’s meeting on Tuesday, March 14^th.

Because a majority of states have a limited rental car insurance license, the working group specifically addressed the uniformity of this particular limited line.  The working group received comments from representatives of the rental car companies and from representatives of the agent groups.  These representatives indicated they would be meeting informally and would attempt to present revised language that would address both the rental car companies’ concerns and the agents’ concerns.

The working group will receive comments on limited-line licensing until April 25^th and will hold an interim meeting in Kansas City on May 11^th and 12^th to finalize the language addressing limited-line licensing.

 Health Entities Working Group of the Examination Oversight (E) Task Force Develops Advisory Survey

The Health Entities Working Group formally adopted a request that the NAIC begin to capture quarterly financial information on health entities beginning in the first quarter of 2001.
           Most of the working group’s focus to date has been on gathering input from the states on the analysis tools currently used as well as developing a listing of 20 ratios. While developing the ratios, the group has gathered data from 1998 HMO data in order to establish suggested benchmarks for the ratios. The ratios, the benchmarks and an explanation of each ratio have recently been combined into one document. The document is in the form of an advisory survey and will be distributed to the states in order to 1) gather feedback on the ratios and the benchmarks selected by the working group and 2) provide guidance that can be used by the states in their analysis of HMOs 1999 financial statements. This survey will be distributed to the state insurance departments once the changes are incorporated into the document. The results of the survey are expected to be received by May 31, 2000.
           The working group has also recently developed a separate survey to be distributed to the states regarding the reporting of financial projections and their use in the analysis of health entities. This survey was discussed by the working group, and minor modifications were made to it during the meeting. The survey will be distributed to the state insurance departments once the changes are incorporated into the document.  The survey responses are due on April 30, 2000.
          The working group also briefly discussed the use of a liquidity test for health entities as developed by the American Academy of Actuaries and is expecting a preliminary report at the June meeting based upon data collected from the NAIC database.
 

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