Bankers Commercial Life Insurance Co. (Texas)
Disbursement Scheduled for Next Week
Premium collections made through New Era from February through November will be released to all guaranty associations by next week (with the exception of Missouri, Texas, and Utah, which receive their related premiums weekly from New Era). Approximately $2.3 million will be disbursed, and guaranty associations will receive an e-mail from NOLHGA detailing the amount by state and line of business.
This money had been allowed to accumulate so that it could be used to fund an assumption reinsurance transaction; however, it is now unlikely any transaction will occur before the middle of 2002. Plans are to release premiums to the applicable guaranty associations periodically (every one to two months) in the future.
Task Force Chair - William Falck; Staff Contact - Paul PetersonWeb Site & E-mail Down on December 28
The NOLHGA office will be upgrading its web server and e-mail system next Friday, Dec. 28. As a result, the NOLHGA Web site will be off-line after 10:00 a.m. that day, and NOLHGA staff will be unable to send or receive e-mail after that time. The e-mail system should be up and running by Monday, Dec. 31, and any e-mail sent to the office on Dec. 28 will be received by the staff member to whom it was sent at that time. The Web site should be back on-line by Jan. 2, 2002.
Due to this work and the NOLHGA office being closed for the holidays, there will be no Weekly Wire on Dec. 28.
Staff Contact -Congress Moving Terrorism Risk-Protection Legislation
Responding to warnings from the insurance industry that coverage for acts of terrorism will not be available after January 2002, the House of Representatives passed H.R. 3210, the Terrorism Risk Protection Act, on Nov. 29. With only two days left before Congress adjourns for the year, the Senate has yet to act on the legislation.
H.R. 3210 authorizes loans to property and casualty insurers to cover 90 percent of terrorism-related losses over $1 billion, up to a maximum of $100 billion in assistance. The bill also requires repayment of all loans up to $20 billion and assesses a surcharge on the industry for costs over $20 billion. Any losses over $100 billion may be reviewed to determine whether Congress will authorize additional assistance.
The bill passed in the House by a 227-193 margin. The vote was largely along party lines, with Republicans in favor of the legislation and Democrats preferring a substitute bill offered by Congressman John LaFalce (D-NY). The biggest dispute during the debate over H.R. 3210 concerned tort reform. Under the bill, plaintiffs are required to bring suits relating to terrorism attacks in federal court, punitive damages are prohibited, and attorney fees are capped at 20 percent of any claim or settlement. The LaFalce bill did not include tort reform provisions.
The Senate Banking Committee leadership has reportedly agreed upon a format for a federal terrorism reinsurance facility. The main difference between the House and Senate approaches is that the Senate would not require the industry to repay federal payments advanced for terrorism claims. But tort reform also is a contentious issue blocking a full Senate vote. It remains to be seen whether the House will back down on the payment issue and whether an agreement can be reached on the tort reform provisions before Congress adjourns.
Staff Contact - Sean McKennaNAIC Holds Winter 2001 Meeting
NOLHGA staff attended the NAIC Winter 2001 meeting in early December. The following is a summary of the meetings various staff members attended:
Insolvency (E) Task Force
The task force heard reports from its Receivers Handbook, Model Act Revision, and Uniform Data Standards Working Groups. The task force also adopted charges for 2002 that largely consisted of items on the group's list of charges for 2001. The principal area of activity for 2002 will be the project to modify and update the Insurers Rehabilitation and Liquidation Model Act.
Insolvency (E) Task Force Working Groups
Receivers Handbook Working Group
Chapter coordinators provided the working group with a status report on revisions to their assigned chapters. The report indicated that there will be minor changes proposed to Chapter 6 (Guaranty Funds), Chapter 8 (HMO Insolvency Cases), and Chapter 9 (Legal). All outstanding proposed changes will be presented and exposed for comment in connection with the Spring 2002 NAIC meeting.
Model Act Revision Working Group
The three drafting subgroups of the Model Act Revision Working Group met to review their assigned issues and to draft work product produced by their members. The subgroups collectively are considering more than 40 issues that could result in changes to the Insurers Rehabilitation and Liquidation Model Act. The issues with potential implications for guaranty associations include: (a) priority of claims, (b) early access distributions, (c) guaranty association intervention and appeal rights, (d) receivership court jurisdiction over guaranty associations, and (e) special and statutory deposits. In light of the cancelled Fall 2001 meeting, the work schedule for this project was extended through 2002, and the drafting subgroups have been asked to produce drafts for their assigned issues by the Spring 2002 NAIC meeting.
NOLHGA staff representatives, with support from the Legal Committee, will be working with each of the subgroups on guaranty association-related issues.
Interstate Insurance Receivership Commission
Discussion at the Interstate Insurance Receivership Commission meeting focused on the continued viability of the compact. In response to the commission's solicitation for input on this issue last summer, three parties submitted comment letters. Two of the letters expressed the view that the compact should be disbanded because of its inability to attract additional members, while the third letter expressed the view that the reasons for the creation of the compact are still valid and that efforts should be made to increase membership. Following discussion, the commission decided to seek additional input from third parties and to discuss the issue further at the NAIC Spring 2002 meeting.
The Commission also briefly discussed the RAA's proposed amendment to Section 615 of the URL. Section 615 currently provides life guaranty associations with the right to continue reinsurance for the purpose of meeting their coverage obligations. The RAA's proposed amendment, among other matters, would require that receivers and guaranty associations affirmatively assume or reject reinsurance contracts within a certain period of time following insolvency. Several parties, including NOLHGA, submitted comments with respect to the RAA proposal. In light of the ongoing discussions with respect to the future of the compact, the commission decided to defer substantive discussion on the RAA proposal.
Staff Contact - Sean McKennaInsolvency Financial Reports Posted On-line
The 2001 edition of the two-volume Insolvency Financial Reports, which had been mailed to guaranty associations in past years, has been posted on NOLHGA's Web site (www.nolhga.com) in the "Confidential Access" section. These reports, which cover all the insolvencies NOLHGA has been involved with, contain general background information, guaranty association obligations, expenses, and other financial information. The reports list this information by both state and individual insolvency.
Please note that only guaranty association administrators can access these reports. Also, the reports will not be mailed this year; they are available only as PDF files on the NOLHGA Web site.
Should you have any problems accessing the files, please contact Paul Peterson (703.787.4119 or [email protected]) or Bryan Owen (703.787.4112 or [email protected]); the files are available on CD or diskette if needed.
Staff Contact - Paul PetersonAssessment and Capacity Report Posted
The NOLHGA Assessment and Capacity Report, which contains information on the annual amounts assessed, called, and refunded from the state life and health guaranty associations, has been posted on the NOLHGA Web site (www.nolhga.com) in the "Restricted Access" section. The report, which is filed annually with the NAIC Insolvency Subcommittee, includes data on amounts assessed, amounts called, amounts refunded, and estimated annual capacity. The information is further broken down by state and individual insolvency cases.
Please note that the "Restricted Access" section is available only to state insurance department and guaranty association personnel. Should you have any comments or questions regarding the report, please forward them to Paul Peterson (703.787.4119 or [email protected]). If you have any difficulties accessing the files, contact Peterson to obtain them on CD or diskette.
Staff Contact - Paul PetersonNew Address for Buck & Associates
Buck & Associates has completed the move to its new location. The new contact information for the firm is:
Buck & Associates Phone: 941.746.8817 625 Foggy Morn Lane Fax: 941.746.8747 Bradenton, FL 34212 Staff Contact -