NAIC Exposes Key ComFrame-Motivated Changes – Insurance Laws and Products & More News Here

Internationally energetic insurance coverage teams (IAIGs) with U.S.
home insurers needs to be alert to key modifications in regulatory
oversight being thought of by the National Association of Insurance
Commissioners (NAIC). These modifications are motivated by the Common
Framework (ComFrame), a worldwide template for regulating IAIGs (i.e.,
giant insurers that straddle nationwide boundaries) adopted in 2019
after years of debate by the requirements-setting physique
International Association of Insurance Supervisors (IAIS).

The NAIC’s Group Solvency Issues Working Group (GSIWG) held
a convention name with events on June 6, 2022, to
take into account:

• Proposals by the GSIWG’s ComFrame Financial Examinations
  Drafting Group for modifications to the NAIC’s Financial
  Condition Examination Handbook (FCEH)




• Proposals by the GSIWG’s ORSA Drafting Group to the
  NAIC’s Own Risk and Solvency Assessment Guidance
  Manual (ORSA Guidance Manual)

The modifications are meant to mirror features of ComFrame deemed
acceptable for U.S. insurance coverage regulation. On the June 6 name,
GSIWG voted to reveal these modifications for a 30-day public remark
interval ending July 8. The modifications have been uncovered in tandem with
earlier modifications to the NAIC’s Financial Analysis
Handbook (FAH) on comparable subjects adopted by the FAH Drafting
Group in order that these three sources — FCEH, ORSA Guidance
Manual and FAH — might be in alignment.

The proposed additions to FCEH meant to handle
ComFrame-motivated targets are typically as follows:

• Consideration of acquiring governance info and
  conducting overview and evaluation procedures on the head-of-IAIG
  stage, when relevant




• Guidance clarifying that, for inside audit committee members
  to be thought of unbiased, they need to not produce other
  operational, threat administration or accounting obligations




• An extra part that features inquiries/procedures
  relevant to IAIGs




• Additional steering indicating that interviews could also be mandatory
  on the head-of-IAIG stage, when relevant




• Additional steering to judge an organization’s/group’s due
  diligence previous to coming into into new, materials outsourcing
  agreements




• Additional steering for reviewing and utilizing new Appendix C
  (“IAIG Risk Management Assessment Considerations”) of the
  ORSA Guidance Manual




• An extra part that features inquiries/procedures
  relevant to IAIGs




• An announcement to respective examination repositories to point
  that some or all dangers inside the important thing exercise may very well be used to
  handle related ComFrame concerns




• Narrative steering supporting the truth that some groupwide
  assessments are extra appropriately carried out via coordinated
  on-web site examinations, when related




• For coordinated examinations of IAIGs or different teams (as
  deemed acceptable), steering that documentation on the Summary
  Review Memorandum could should be expanded to incorporate groupwide
  conclusions




• Additional steering from ComFrame and from different NAIC sources
  concerning IAIG willpower for background functions, in addition to an
  added reference to the FAH as the first supply for associated
  info and procedures for figuring out the IAIG and head of the
  IAIG

The June 6 modifications additionally would add numerous updates all through the
ORSA Guidance Manual to include:

• Enhancements associated to the remedy and disclosure of
  liquidity and enterprise methods inside the evaluation




• Enhancements associated to extra concerns related to
  IAIGs

Among objects from the ORSA Guidance Manual particularly raised on
the June 6 name have been:

• Identification of the top of the IAIG and which non-insurance coverage
  operations needs to be included in IAIG oversight




• Requirements that the ORSA Summary Report describe “primary
  targets and goals of the insurers’ enterprise technique for all
  insurance coverage and non-insurance coverage operations in scope”




• “Resilience in opposition to extreme however believable liquidity
  stresses,” adequacy of present sources of liquidity in stress
  situations and insurance policies to handle liquidity threat and contingent
  funding sources




• A brand new part within the ORSA Guidance Manual on IAIGs




• Proposed modifications to new Appendix C, “IAIG Risk Management
  Assessment Considerations”

The content material of this text is meant to supply a basic
information to the subject material. Specialist recommendation needs to be sought
about your particular circumstances.