NAIC vetoes reserve relief for VA carriers

A National Association of Insurance Commissioners executive group last Thursday vetoed a proposal from the insurance industry to loosen required capital and surplus levels.
FEB 01, 2009
A National Association of Insurance Commissioners executive group last Thursday vetoed a proposal from the insurance industry to loosen required capital and surplus levels. Members of Kansas City, Mo.-based NAIC met via a conference call to discuss six initiatives that were pitched by the American Council of Life Insurers. The measures sought to lower reserve requirements for carriers that sell variable annuity products and life insurance so that "redundant reserves" could be shifted to bolster the insurers' balance sheets. The ACLI had hoped that the commissioners would enact the proposals immediately so that they would be effective when insurers reported their 2008 financial results. However, regulators were put off by the sense of urgency and said that the initiatives could wait. Furthermore, they were concerned about the appearance of easing rules on insurers at a time when consumers are concerned about the strength of financial institutions. The industry was unable to make the case that it requires immediate help from the regulators. "I would support many of these changes, but I don't think we should support them in this manner and at this time," said Eric R. Dinallo, New York's insurance superintendent and a member of the NAIC's Life Insurance and Annuities Committee. "The message would be detrimental to the industry." In a statement, the Washington-based ACLI said it is disappointed in the outcome. "It's important to note that today's decision by the NAIC in no way affects life insurers' ability to pay claims," ACLI president and chief executive Frank Keating said in the statement. "Adoption of the proposal would have provided a financial cushion and operational flexibility during these turbulent times." The regulators' decision to deny the proposal was well-received by consumer activists. "We think it was a good day for state regulation of insurance," said Birny Birnbaum, executive director of the Center for Economic Justice in Austin, Texas. "They realized that it made no sense to rush into weakening consumer protections during a tough economy and this financial-market meltdown." The proposals now go back to various NAIC committees for further consideration. E-mail Darla Mercado at [email protected].

Latest News

Osaic names new CMO and Empowered Independence head
Osaic names new CMO and Empowered Independence head

Former PulteGroup and Citizens executives join the broker-dealer network after a year of senior leadership departures

RIA moves: Prospera lands $600M Cornerstone team in Rochester
RIA moves: Prospera lands $600M Cornerstone team in Rochester

Independent RIA Concurrent adds over $1B across six moves, while OnePoint BFG opens West Palm Beach with a $240M team

Creative Planning adds $2.2B fee-only RIA Rockbridge in Syracuse
Creative Planning adds $2.2B fee-only RIA Rockbridge in Syracuse

The mega-RIA keeps absorbing independent fiduciary firms as Cerulli data shows the fee-only segment losing asset share

Alternatives need a standard liquidity disclosure, not more access
Alternatives need a standard liquidity disclosure, not more access

This year's rush for the exits in private credit showed why investors must understand lockup periods before they weigh the return potential

Mercer Advisors snaps up AI-native tax firm Fifteenth in tech-forward deal
Mercer Advisors snaps up AI-native tax firm Fifteenth in tech-forward deal

Mercer adds specialized equity compensation tech and Big Four tax talent as UHNW demand for integrated tax planning intensifies.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor