American Chambers Life (OH)

Plan for Transition to Downers Grove Facility

According to John Frohlich of Antares, the move from the Naperville office to the Downers Grove facilities will take place starting on Thursday, September 21. The target date for the Downers Grove office to be fully operational is September 25. Downers Grove will be dedicated to NOLHGA claims adjudication.

Additionally, Antares has finalized an agreement with a Call Center outsourcing company in Beachwood, Ohio, which will designate up to 20 full-time, fully-trained customer service representatives to handle NOLHGA calls, effective September 18, (Phone number: 1.800.393.8633), allowing personnel resources in Downers Grove to focus on other necessary work. Processes are being implemented for communication between the new Call Center and the Downers Grove facility.

All new incoming NOLHGA mail is intended to be handled out of the Parkersburg, West Virginia office (Address: NOLHGA, PO Box 2998, Parkersburg, WV 26102-2998). Handling at this facility will encompass all processes from receipt through controlling, before being distributed to the Downers Grove facility for actual adjudication. This will allow the Downers Grove office to handle the uncontrolled mail received previously.

A more descriptive letter from Antares is being mailed to the Guaranty Associations regarding the move. The TPA/Claims Subgroup is working with Frohlich on this letter.

Anne Hancock, an independent contractor, began work for the ACLIC Task Force on Monday Sept. 11th. She is currently scheduled to work through October 6th, reporting to Mark Femal and the TPA/Claims Subgroup.

Task Force Chair -Chuck Gullickson;   Staff Contact - Centennial Life (KS)

Financial Questionnaire Due

Guaranty associations are reminded that financial information questionnaires are due to the receiver by September 20 for inception through June 30, 2000. Questions should be directed to Dave Hamilton in the receiver's office at 785.843.0181, or to task force chair Mark Femal at 608.242.9473.

In other news, affected guaranty associations will be receiving an information package regarding the assumption of the LTD claim liability by Hartford. Guaranty associations will have the normal 30 days to opt-out.

Task Force Chair -Mark Femal;   Staff Contact - American Standard Life (OK)

Early Access Agreement Approved

On September 14, Oklahoma District Court Judge Nancy Coats approved an early access agreement between NOLHGA, participating guaranty associations (PGAs) and the American Standard Life receiver, and took judicial notice of a settlement agreement between NOLHGA, the PGAs, LACOP and the Pennsylvania Guaranty Association. The settlement agreement resolves a dispute with LACOP/Pennsylvania over an alleged secured claim against the ASL estate, while the early access agreement will result in a distribution of substantially all of the liquid assets held by the ASL estate. The ASL task force will be in communication with PGAs as to the distribution of their share of the early access funds.

Judge Coats approved the early access agreement over the objection of David Nicholas, the former owner of ASL. Mr. Nicholas had argued for an accounting of the company prior to allowing the early access distribution. Judge Coats denied Nicholas' objection on the basis that the court had previously ruled he lacked standing in the case, and that his objection in any event was untimely.

Task Force Chair -Andrea Bowers;   Staff Contact - Bill O'Sullivan

Fall 2000 NAIC Report

The following is a summary of meetings attended by NOLHGA staff at the Fall NAIC meeting:

Insolvency (E) Task Force

The Task Force met on September 12 and heard reports from its Working Groups as to business conducted since the Summer 2000 Meeting. It also adopted a revised draft of Chapter 8B to Receivers Handbook concerning HMO insolvencies, and a policy statement prepared by the Guaranty Fund Issues Working Group relating to insolvency issues concerning diversified financial institutions.

Insolvency (E) Task Force Working Groups

Receivers Handbook Working Group
The Receivers Handbook Working Group met on September 11 and voted to recommend to the Insolvency (E) Task Force materials to be included in Chapter 8 on HMO/managed cared insolvencies. The Working Group also noted that there would be an update to Chapter 9 (Legal Considerations) to reflect case law developments, and minor changes to Chapter 6 (Guaranty Associations) to reflect comments and updated materials provided by NOLHGA.

Uniform Receivership Law Working Group
The Working Group held a three hour working session for the purpose of continuing its review of the Uniform Receivership Law (URL). The focus of the session was on addressing questions and comments on Chapters 8 through 11 of the URL. Various interested parties, including NOLHGA, presented responses to comments and questions previously raised by commentators. From the perspective of guaranty associations, the key issues were (i) should other parties (including guaranty associations) have the right to propose a plan if a receiver does not propose his own plan within a stated period; (ii) is it necessary to have a plan in every case; and (iii) why should an estate use a liquidating trust when the receiver is charged with marshaling and liquidating assets.

At the conclusion of the review of the 4 chapters, the Working Group discussed the possible approaches for proceeding with this project. While several different perspectives were given, there seemed to be a sentiment for keeping the existing NAIC Model and incorporating portions of the URL on a selective basis. However, the final decision of the Working Group will not be made until the Winter 2000 meeting.

Guaranty Fund Issues Working Group
The Working Group's meeting focused on a draft policy statement concerning asset recovery and other receivership issues arising out of the Gramm-Leach-Bliley Act and the failure of a diversified financial institution owning an insurance company. After brief discussion, the Working Group voted to recommend the draft policy statement to the Insolvency (E) Task Force.

Interstate Insurance Receivership Commission

The Commission voted to amend the Uniform Receivership Law (URL) to add a provision to clarify what is an insurance policy for the purposes of Section 713 B which governs priority of claims. The provision states that a policy includes insurance company products that are policies under the laws of the state either as of the effective date of the URL, or as of the date of the entry of a liquidation order against the company which issued the product.

Financial Services Modernization (G) Task Force

Privacy Issues Working Group
The Privacy Issues Working Group met twice during the Fall 2000 meeting. At its meeting on September 10, the Working Group continued to discuss and receive comments from interested parties with respect to draft interim privacy regulations. Among the comments made by industry were that the privacy regulations should be limited to financial information (i.e., the provisions dealing with health information should be eliminated and dealt with in a different context), and that the regulations should not be expanded beyond the "customers" of a financial institution (i.e., insurance policy holders) to include beneficiaries and claimants under insurance policies. These comments were not accepted in the final draft of the regulations that was adopted by the Working Group at its meeting on September 12. It is anticipated that this draft will be adopted by the NAIC Executive Committee and Plenary during a teleconference to be held on September 26.

Coordinating with Federal Regulators Working Group
This working group has been in discussions with federal banking regulators to coordinate on various issues. It was reported that meetings/discussions had taken place with the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Reserve Board. The discussion items with these regulators include regulating bank sales of insurance, risk-based capital, troubled company issues and insurance risk.

In addition, the Working Group reported on efforts to draft model information sharing agreements with various federal regulators. The NAIC has already adopted such an agreement with the Office of Thrift Supervision that 23 states have executed, and is close to finalizing similar agreements with the Federal Reserve Board, the Office of Comptroller of the Currency and the Federal Deposit Insurance Corporation.

  Staff Contact - Bill O'Sullivan

ETC

Annual Meeting Registration

The registration deadline for NOLHGA's 17th Annual Meeting in Orlando, Florida is September 20. Attendees are urged to make their hotel reservations and submit their meeting registrations as soon as possible. Hotel space may still be available for those who have not yet made their reservations.

Joint NOLHGA, NCIGF, IAIR Seminar

Registration for the November 15-17 Joint Seminar (NOLHGA, NCIGF, and IAIR) is now open to all those interested in attending. Due to meeting room restraints, NOLHGA members are urged to register as soon as possible.

E-mail address clarifications

The correct e-mail address for NOLHGA General Counsel Bill O'Sullivan is [email protected]. The correct e-mail address for Senior Vice President & Actuary Bill Howard is [email protected].

CALENDAR/CONFERENCE CALLS

Sept. 20Joint Meeting of NOLHGA/NCIGF Legal Committees, Chicago, IL
Sept. 21NOLHGA Legal Committee Meeting, Chicago, IL
Oct. 9NOLHGA Board of Directors' Meeting, Orlando, FL
Oct. 9State Board Chairs Conference, Orlando, FL
Oct. 9-11NOLHGA Annual Meeting, Orlando, FL