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IN THIS EDITION:

• Introduction
• Long-Term Care Insurance (EX) Task Force
• Privacy Protections (D) Working Group
• Receivership and Insolvency (E) Task Force (RITF)
• Receivership Law (E) Working Group
• Special (EX) Committee on Race and Insurance

Introduction

The following is an update on the recent activities of various NAIC task forces and groups, including the Long-Term Care Insurance (EX) Task Force, Privacy Protections (D) Working Group, Receivership and Insolvency (E) Task Force (RITF), Receivership Law (E) Working Group and Special (EX) Committee on Race and Insurance.

Long-Term Care Insurance (EX) Task Force

This task force is charged with developing consistent state-based regulatory approaches to address issues related to long-term care (LTC). The task force has appointed the following subgroups to proceed with its three principal workstreams: (1) The Multistate Rate Review Subgroup is working to develop a consistent, national approach to reviewing rate increases; (2) the Reduced Benefit Options Subgroup is working to develop recommendations for providing consumers with appropriate options for benefit modifications as alternatives to rate increases; and (3) the Financial Solvency Subgroup is exploring restructuring techniques and pre-rehabilitation planning options that can be used to minimize risk to consumers. The task force held a virtual meeting on April 9, in conjunction with the NAIC’s 2021 Spring National Meeting, at which time it received reports from the Multistate Rate Review and Reduced Benefit Options Subgroups.

The Multistate Rate Review Subgroup, which met in regulator-only sessions on February 25 and March 9, has continued to work with its Multistate Actuarial Review Team to develop a process and framework for reviewing rate increase requests and developing Rate Advisory Reports that can be used by regulators in each state to evaluate these requests. The review team, which includes actuaries from five state insurance departments, has been working on rate increase filings submitted by several insurers and circulating the Rate Advisory Reports related to those requests to the task force for feedback as to the design and usability of the reports.

The subgroup has also been working on developing a document outlining a framework for the multistate rate review process. The first draft of the framework document, which is focused on operational issues, was posted to the NAIC website on April 9 and exposed for a 45-day comment period. Comments are due by May 24. A revised draft, which will include additional sections addressing actuarial issues, is expected to be released for public comment by June 1.

The Reduced Benefit Options Subgroup held two regulator-only calls on March 11 and March 24 to discuss plans for addressing its charges for 2021, which include: (1) consideration of innovative options for offering wellness benefits and programs for LTC insureds; (2) developing mechanisms to aid in the comparison of reduced benefit options; and (3) exploring greater uniformity in consumer notices relating to offers of reduced benefit options.

In regard to the first charge, the subgroup held a virtual public meeting on May 4 to hear presentations from industry representatives concerning experiences with wellness pilot programs and related regulatory issues. As a starting point for the remaining charges, the subgroup has appointed a drafting group to review and consider revisions to address reduced benefit options in the checklist that was included as Exhibit B to the Framework document released by the Rate Review Subgroup on April 9. The revised checklist will be exposed for comment at a later date.

Privacy Protections (D) Working Group

The working group met via public conference call on March 29, during which it received a Federal Privacy Legislation update from Brooke Stringer (the NAIC’s Senior Financial Policy & Legislative Advisor). According to Ms. Stringer, while Republicans and Democrats in Congress agree that federal privacy legislation is needed, the two sides cannot agree on terms. The key points of contention are: (1) at what level should any federal legislation preempt state laws, and (2) whether any federal legislation should contain a private right of action. Ms. Stringer explained that as more states adopt privacy legislation, this puts additional pressure on Congress to pass legislation. The NAIC is meeting virtually with Congressional staff and finding it helpful to say that states have implemented the NAIC Model Acts and other state laws and regulations in the best interest of insurance consumers.

Jennifer McAdam (Senior Counsel with the NAIC) gave a state privacy legislation update to the working group, reporting that 23 states have introduced privacy bills. However, the only state to pass legislation this year was Virginia. According to Ms. McAdam, the common issues the NAIC is seeing in the state level legislation include privacy and data security, right to delete information, exclusion of financial institutions subject to the Gramm-Leach-Bliley Act (including insurers), risk enforcement requirements, and disputes regarding a private right of action.

The group also reviewed the 2021 NAIC Member-Adopted Strategy for Consumer Data Privacy (which can be found as attachment D at this link) and received comments from an industry representative.

Receivership and Insolvency (E) Task Force (RITF)

The RITF held a call on March 12 in lieu of meeting in connection with the NAIC’s Spring National Meeting. During the call, the RITF heard reports from its Receivership Financial Analysis Working Group and the Receivership Law Working Group, as well as updates concerning various projects.

The RITF considered and adopted a Guideline for definition of “reciprocal state” for receivership laws that is intended to facilitate recognition of stays and injunctions in receiverships affecting multiple states. James Kennedy (Texas) reported that the Guideline is consistent with the NAIC’s Part A accreditation standards for state receivership laws such that if the state has a receivership scheme, it would be deemed a reciprocal state. Mr. Kennedy noted that since the proposed definition is a Guideline, it would not be required to be adopted by all states. Following discussion, the RITF adopted the Guideline by unanimous vote. Thereafter, on April 13, the Guideline was adopted by the NAIC’s Financial Condition (E) Committee.

Next, the RITF considered a proposed charge to perform a comprehensive review and update of the Receiver’s Handbook for Insurance Company Insolvencies. Mr. Kennedy reported that the last comprehensive review was done more than 10 years ago, and that the Handbook contains out-of-date information. The RITF appointed a new subgroup to perform this task.

Representatives from Florida, Illinois, Michigan, and Oklahoma volunteered to serve on the subgroup. Others interested in volunteering were asked to contact NAIC staff. The subgroup is charged with reviewing the Handbook to identify areas where information is out of date or where updates or additional guidance is needed, and to provide recommended edits. The work is to be completed by the 2022 NAIC Fall National Meeting. NOLHGA staff has volunteered to assist in this effort.

Receivership Law (E) Working Group

The working group met via conference call on February 4, March 4, and May 4 to review comments and continue discussions concerning proposed revisions to the NAIC’s Holding Company Model Act and Holding Company Model Regulation to address continuity of essential services provided by affiliates for insurers in receivership. Comments were submitted by the Florida Insurance Department, the American Council of Life Insurers, America’s Health Insurance Plans and the Blue Cross Blue Shield Association; Arbor Strategies LLC; Morgan Lewis & Bockius, LLP; and NOLHGA and the NCIGF. The comments focused, among other things, on requiring performance bonds of affiliates, the handling of records and data, jurisdiction over affiliates in the receivership court, requirements for affiliate service provider contracts, and pre-receivership cooperation. Proposed amendments to the Model Act and Model Regulation were adopted by the working group during its May 4 call.

Special (EX) Committee on Race and Insurance

The committee met on March 24 and April 6 in regulator-to-regulator sessions and also met on April 12 during the NAIC Spring National Meeting. At the April 12 meeting, NAIC President Altmaier (Florida) reported that the committee had established five workstreams to develop initial recommendations, and that most of the committee’s work has been done at the workstream level. Each workstream, except for Workstream Two (see below), held at least one open meeting as it conducted its initial work. The 2021 proposed charges exposed for comment are the result of the March and early April initial consultations with staff, and comments were due by May 14.

The committee next heard updates on the five workstreams, which are:

• Workstream One: Research/analyze the level of diversity and inclusion within the insurance industry.
  
• Workstream Two: Research/analyze the level of diversity and inclusion within the NAIC and the state insurance regulator community.
  
• Workstream Three: Examine and determine which practices or barriers exist in the insurance sector that potentially disadvantage people of color and/or historically underrepresented groups in the property/casualty (P/C) line of business.
  
• Workstream Four: Examine and determine which practices or barriers exist in the insurance sector that potentially disadvantage people of color and/or historically underrepresented groups in the life insurance and annuities line of business.
  
• Workstream Five: Examine and determine which practices or barriers exist in the insurance sector that potentially disadvantage people of color and/or historically underrepresented groups in the health insurance line of business.

Lastly, Commissioner Altmaier introduced the interested parties who submitted initial comments to the 2021 proposed charges and requested to comment on the proposed charges.