The following represents a summary of the key decisions made by the National Association of Insurance Commissioners (NAIC) during the 2017 Fall National Meeting.
The Executive (EX) Committee met on December 3, 2017. During this meeting the committee heard a report from the Interstate Insurance Product Registration Commission (IIPRC) providing an update from the Compact office regarding third-party litigation out of the federal district court of Colorado that raises legal issues relating to the constitutionality of the Compact Office. Both the IIPRC and the NAIC submitted amicus briefs to provide the court with the background on the purpose of the Compact and the legal principles used in its development. The committee noted that the EX committee held a joint session with the Internal Administration (EX1) subcommittee on December 2, 2017 in a regulator-to-regulator session. The committee and subcommittee adopted the November 9 Information Systems (EX1) Task Force report, which included the following action: 1) received an operational report from NAIC staff for information technology (IT) activities of the NAIC; 2) received updates on NAIC technical projects closed from July through October 2017; and 3) received an update on the review of five 2018 fiscals with a technology component by the Technical Consulting (EX1) Working Group.
The committee also received a written report on the progress of ongoing model law development efforts. The committee noted that the Creditor-Placed Insurance Model Act (#375) has been open since 2013. The Property and Casualty Insurance (C) Committee has decided to focus on a new Lender-Placed Real Property Insurance Model Act, having to do with real property, rather than focusing on Model #375, which focuses on personal property. Therefore, the Property and Casualty Insurance (C) Committee closed its request for model law development for the Creditor-Placed Insurance Model Act (#375). The committee received a status report of model law development efforts for amendments to the following:
- Health Insurance Reserves Model Regulation (#10);
- Health Carrier Prescription Drug Benefit Management Model Act (#22);
- Accident and Sickness Insurance Minimum Standards Model Act (#170);
- Model Regulation to Implement the Accident and Sickness Insurance Minimum Standards Model Act (#171);
- Annuity Disclosure Model Regulation (#245);
- Suitability in Annuity Transactions Model Regulation (#275)
- Creditor-Placed Insurance Model Act (#375);
- Life and Health Insurance Guaranty Association Model Act (#520)
- Life Insurance Disclosure Model Regulation (#580);
- Life Insurance Illustrations Model Regulation (#582);
- Mortgage Guaranty Insurance Model Act (#630 );
- Short Duration Long-Term Care Policies Model Law;
- Travel Insurance Model Law;
- Lender-Placed Real Property Insurance Model Act.
Cybersecurity & Big Data
Cybersecurity (EX) Working Group
The Cybersecurity Working Group met on December 3, 2017. During the meeting, the working group heard an update on the status of federal cybersecurity regulation. At the federal level, there has been several discussions in the U.S. Senate and House of Representatives regarding an institution’s responsibility for reporting data breaches to regulatory authorities and whether federal preemption of state law with regard to oversight of data breaches is deemed necessary. The U.S. Department of the Treasury has recommended prompt state adoption of the Insurance Data Security Model Law. The Treasury has indicated that if state adoption of the Model Law has not occurred within 5 years federal preemption could result.
Big Data (EX) Working Group
The Big Data (EX) Working Group met on December 2, 2017. The working group discussed a draft related to the current regulatory framework. The draft report facilitated discussion around three questions: 1) regulatory issues; 2) the applicability of a current regulatory standard; and 3) whether revisions need to be made to the current regulatory standard to address consumer, industry and regulator concerns as it relates to the use of said data (Charge A). With respect to Charge A, the working group is initially focused on evaluating regulation of personal lines in the property and casualty space while life insurance will be considered at a later time. The working group elected to survey the various states to evaluate state laws with respect to rating and underwriting prohibitions before finalizing the draft report. The working group briefly discussed a report related to current data collected and how regulators use said data. The report is meant to facilitate discussion on which tools are required for regulators to appropriately monitor the marketplace and evaluate the way in which data is used for underwriting, product rating, claims administration and marketing (Charge C). The working group will coordinate discussions with subject matter experts and NAIC groups and receive comments related to Charge C until January 12, 2018. The remainder of the discussion centered around the regulation and technical analyses of data collected by insurers and the data’s use in complex models used for underwriting, product rating and claims administration (Charge B).