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Monica J. Lindeen is 2015 president of the National Association of Insurance Commissioners. She serves as Montana's commissioner of securities and insurance, a position to which she was first elected in 2008 and re-elected to a second term in 2012. She previously served in the Montana House of Representatives. Ms. Lindeen recently spoke to Business Insurance Senior Editor Mark A. Hofmann about the goals and challenges facing the NAIC. Edited excerpts follow.
Q: What are the major challenges facing the NAIC in the coming year?
A: We're going to continue our work on principles-based reserving and also the concerns we have about life insurer-owned captive reinsurers. Managing cyber risks is also a challenge that's going to be facing all financial regulators on a number of levels. We're also going to be working with Congress and our U.S. federal regulators, along with international bodies, to ensure a stable financial system that includes a robust insurance marketplace. We're also going to continue our review of our internal governance structure.
Q: What are the NAIC's priorities for improving state regulation, particularly regarding commercial insurance?
A: We're always looking at ways to innovate. Cyber security is one emerging area. We have a new task force that will be taking that issue on. We also continue to be focused on some of our other priorities from 2014, including health care reform.
Q: What does the NAIC see as the proper role of the Federal Insurance Office and the Financial Stability Oversight Council? Is there concern that FSOC and FIO will attempt to expand their powers at the expense of state regulation?
A: Congress has repeatedly reaffirmed the primacy of the states' role in insurance regulation. The Federal Insurance Office has a limited role as an information resource and obviously to represent the federal government internationally where appropriate. FIO's not a regulator, and it has no duty to policyholders so it would be inappropriate for them to pre-empt state law and regulation.
The Financial Stability Oversight Council is charged with monitoring the stability of the financial system in the U.S. I don't think its role in any way negates the authority of insurance departments to regulate. We have to work in closer coordination with the Federal Reserve in regard to insurers that might be designated systemically important financial institutions. While the FSOC may designate an insurer to be systemically risky, certainly that doesn't negate our role to regulate the company as we always have.
Q: Is the organization concerned about international regulators' approach to group supervision?
A: We've really been working closely with them and remain committed to working with our international counterparts in developing those standards. The activities at the international bodies are nonbinding. But we also remain concerned that anything that happens at the international level could have a potential impact on our U.S. insurance sector. We're going to make sure we have strong coordination and communication, and we're going to continue to stress the importance of participating in supervisory colleges. Certainly these supervisory colleges help facilitate the exchange of information and assessments, and enable members to gain a common understanding.
Q: Where can commercial insurance regulation be streamlined?
A: The commercial insurers have already benefited from a lot of the operational efficiencies the NAIC has implemented. For example, there's our electronic filing system, and there are interstate insurance product regulation compacts. We have 44 states that are part of the compact, and we are going to encourage the rest of the states to adopt the compact. We really support the mission of developing uniform standards.
A liability lawsuit filed by hundreds of workers against a business unit of BP P.L.C. can't be dismissed under workers compensation exclusive remedy provisions because BP hasn't shown that the plaintiffs suffered work-related injuries, a federal judge ruled last week.