Consumer groups warn against weakening the NAIC Capital Requ

 

Thursday, Mar 05,2009, 2:02:13 PM   Click:

Consumer groups warn against weakening the NAIC Capital Requirements Raymond J Lehmann
Consumer groups call the National Association of Insurance Commissioners to reject a plan submitted by the American Council of Life Insurers relax the capital requirements to help life insurers meet the reserve stock levels in the middle of the lower prices and a deteriorating economic climate.

In correspondence to the NAIC's Capital and Surplus Relief Working Group, the Consumer Federation of America and the Center for Economic Justice suggest less stringent reserve requirements could jeopardize the life and annuity insurance . The proposal - which deals with the life insurance reserves, annuity reserves and capital at risk, venture capital investments and accounting for deferred tax assets - was brought before the working group earlier this month during the national meeting of the NAIC in Grapevine, Texas.

"It is simply incomprehensible that the regulators want to weaken the very standards they announced a few weeks. State regulators should be ashamed to put the interests of the industry to date before the interests of consumers," said J. Robert Hunter, CFA, director of insurance.

Some consumer groups concerns were echoed by Professor Joseph M. Belth, University of Indiana. In a letter to the group, Belth said "regulators should retain their conservative accounting rules to encourage the" soundness "of insurance companies, especially those contracts that extend over several decades."

"I urge to abandon the emergency regulations and the secrecy of the relief effort to provide capital for life insurance companies until he had the opportunity to determine, by means of attention, deliberate, and open, (a) if the repair is necessary, (b) the magnitude of relief required, and (c) if the relief is long-term best interests of the insurance buying public, "says Belth.

The ACLI supports the current system of calculating the reserves is too conservative and requires companies to link the capital that could be used to provide more products at competitive prices. In a statement, ACLI President Frank Keating said the group "looks forward to working with insurance regulators at the NAIC, in their efforts to meet the challenges we face."

In its preliminary recommendations, the Working Group approved the proposal's provisions that would affect mortality tables and facilitate Commissioners discretion for eligible collateral for reinsurance, among other changes. The proposals have been suggested as substitutes affect stand-alone and adequacy of funds generally accepted accounting protocols.

District of Columbia Insurance Commissioner Thomas Hampton, head of the working group, said a proposal could be finally approved by the NAIC Executive Committee the first week of January.


Copyright © 2009 hours Best Company, Inc. Consumer groups call the National Association of Insurance Commissioners to reject a plan submitted by the American Council of Life Insurers relax the capital requirements to help life insurers to compliance inventory levels in the middle of the fall in prices and a deteriorating economic climate.