Executive Life (CA)
Motions to Dismiss Denied
In the California Commissioner's lawsuit against Altus Finance and other defendants, U.S. District Judge Howard Matz late last week denied certain defendants' motions to dismiss. In his ruling, Judge Matz did reject recent efforts by the Commissioner to add a rescission claim to his case, stating that he would not permit recovery on that theory. Judge Matz, however, allowed the Commissioner's case to go forward on other claims for restitution and damages. In response to arguments that the Commissioner's damage claims should be dismissed, Judge Matz stated, "To prevent the Commissioner from pursuing the full range of fraud damages would exalt technicalities over the potentially overriding importance of redressing a great harm to the public interest allegedly committed by sophisticated, powerful entities. This the Court will not do."
Task Force Chair - Art Dummer; Staff Contact - National Affiliated Investors Life (LA)Updated Expense Filings Requested
All affected associations received on March 28 a memorandum requesting an update to their Class 1 administrative expense filings with the NAIL Liquidator, including inception to date expenses as of December 31, 2000. Forms should be completed no later than April 18, 2001. Please ensure a copy of your filing is also faxed to Paul Peterson at 703.481.5209.
Task Force Chair - Chuck Gullickson; Staff Contact - Paul PetersonGuaranty Association Model Act Legislation Update
Many states have begun the process of reviewing and considering the recent amendments to the NAIC Life and Health Insurance Guaranty Association Model for the purpose of updating their state guaranty association statutes. As of this week, we are aware of at least eight states that have adopted all or part of the Model Act amendments, including Alaska, Arkansas, Colorado, Iowa, Kentucky, Mississippi, North Dakota and, most recently, Nebraska. In addition, there are at least six states that have Model Act amendment legislation pending before their state legislatures. These include Connecticut (SB 1247), North Dakota (SB 2192 -adding provisions regarding equity indexed products to previously adopted Model Act amendments), Utah (HB 109), Washington SB 5958), Nevada (SB 252) and, most recently, Minnesota (HF 2130).
NOLHGA is continuing to collect information regarding the various state initiatives relating to the Model Act amendments, and we ask that all associations continue to let us know of any related activity on the Model Act amendments in their state. Staff Contact -Joni Forsythe 703.787.4103
Staff Contact - Joni ForsytheSpring 2001 NAIC Report
The following is a summary of meetings attended by NOLHGA staff at the Spring NAIC meeting:
Insolvency (E) Task Force
The Task Force met on March 27 and heard reports from its Uniform Data Standards, Receivers Handbook and Model Act Revision Working Groups.
Insolvency (E) Task Force Working Groups
Receivers Handbook Working Group
Chapter Coordinators and Research Editors provided the Working Group with the following status reports regarding updates for the Handbook's 2001 Supplement: (i) Chapter 2 -- Data Processing will be updated to address security issues; (ii) Chapter 5 -- Claims will be updated to address Statement of Statutory Accounting Principle 55 and possibly the use of the internet in claims administration; (iii) Chapter 9 -- Legal Considerations will be updated to address recent case law and other legal developments.
The Working Group's Gramm-Leach-Bliley Act (GLB) subgroup reported that materials had been collected on both GLB and the new privacy regulations issued by the Department of Health and Human Services (HHS). The subgroup's next step will be to investigate the issues and draft possible language for inclusion in the Handbook.
The Working Group also briefly discussed the possible impacts of the HHS privacy regulations and the Department of Labor's (DOL) Claim Handling Regulations (and related claims handling legislation being considered in various states) to receivers and guaranty associations. One member of the Working Group expressed concern that the HHS regulations could possibly interfere with a receiver's ability to share information with guaranty associations. It was agreed that the HHS and DOL regulations should be investigated further.
Model Act Revision Working Group
This new Working Group has been charged with revising the NAIC Insurers Rehabilitation and Liquidation Model Act to incorporate acceptable provisions from the Uniform Receivership Law (URL) and to make other appropriate changes. During its meeting on March 26, the Working Group reviewed a work plan for the completion of the project and agreed that as an initial step, all interested parties should submit issues for the Working Group's consideration by April 26. The Working Group will then hold an interim teleconference for the purpose of prioritizing the issues and delegating responsibility for investigating and drafting appropriate language. The Working Group established a final deadline of the June NAIC meeting for raising new issues. The proposed target completion date for the project is December 2001, although the work plan recognizes that an additional one-year period may be required to complete the project. NOLHGA staff intends to be actively involved in this project.
Interstate Insurance Receivership Commission
James Stinson, who served on the Commission's Receivership Law Advisory Committee, reported on amendments to the Uniform Receivership Law proposed by the Reinsurance Association of America. Mr. Stinson reported that most of the amendments should be made as technical corrections, but that several of the changes appeared to have substantive implications. The Commission asked Mr. Stinson to resolve these issues with the Reinsurance Association of America and to report back at the June NAIC meeting.
The members of the Commission reported on the status of the Uniform Receivership Law in each of their states. The law has been introduced as a bill in Illinois but has not yet been introduced in the other two compacting states.
Regulatory Frame Work Task Force (B)
Managed Care Working Group This Working Group is charged with making revisions to the NAIC Health Maintenance Organization Model Act. The group's approach is to update the model act with respect to the regulation of HMOs, but to separately consider the "downstream risk" issues presented by an HMO's reliance on provider organizations and other third parties to meet their obligations to provide or arrange for medical services to enrollees.
The Working Group's current draft of the model act provides insurance commissioners with various tools for dealing with solvency/insolvency issues, including risk based capital, net worth and deposit requirements; an assessment mechanism which permits a commissioner to assess other HMOs to pay claims of a failed HMO; a provider "hold harmless" provision; and an open enrollment and replacement coverage provision. The current draft does not appear to have any implications for traditional life and health insurance guaranty associations.
Staff Contact - Bill O'SullivanMPC Hotel Registration Information
The May 9-11 MPC Meeting will be held at the Providence Marriott in Providence Rhode Island. The cutoff for making hotel reservations is April 16. To make a reservation, call the Marriott at 401.272.2400. Please request the NOLHGA rate of $159 single/double. Complete meeting information will be available early next week.
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