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The State of Insurance Regulation: Q&A With NAIC President Susan Voss

Between healthcare reform and Dodd-Frank, insurance regulators have a full plate of rules to implement that will affect all lines of business. Iowa insurance commissioner and NAIC president Susan Voss spoke recently with I&T associate editor Nathan Golia about how regulators are harmonizing their efforts, what solvency means for insurance Carriers and where social media fits in insurance.

Much of the conversation about insurance regulation this year has been about who would implement rules. How will the NAIC work with the Federal Insurance Office and the Financial Stability Oversight Council?

Voss: Between the FIO and the FSOC, it's safe to say we're trying to figure out how we're all going to interact right now. We're starting to set up a set of regular meetings with FIO. It's not meant to be onerous, but it's so we can talk about issues on a regular basis. There are many discussions, especially on international issues that we need to do together. They have a report due to Congress in January and they're focusing their attention on that at this point. Everyone's getting up to speed, but we need to share what's important for insurance regulation in general, as opposed to the bank-centric view.

Solvency is one of the issues that's been examined mainly from a bank point of view. But what does solvency regulation mean for insurance companies?

Voss: We are always looking at solvency oversight because the industry has changed a lot. There are different types of products out there -- the notion that insurance companies are only selling universal life and term is very different now. A few years ago, we decided to take a deeper dive to see if we had the right things in place. We're also doing some education for federal and insurance regulators as to why insurance risks are different than [risks among] banks and securities.

Based on what's going on at the international level, where there is much more of a desire to coordinate, we're looking at the group-holding models. We also look at reinsurance collateralization, because most of that is foreign-based and we require 100 percent collateral. We've been meeting on a regular basis with the Institute of International Finance and the E.U. Commission, so at the end of the day, if you're a regulator in the U.S., Asia or Europe, we're getting to the same view of the solvency of a company.

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So from an insurance persepctive, is solvency mostly a question for life companies?

Voss: The life companies are really the major ones we're talking about, though the P&C carriers are concerned with group supervision and reinsurance collateral. You've got Liberty Mutual, for example, that has a foreign component.

Do capital reserves for CAT events fall under this umbrella, especially considering that we're in an active cycle for natural disasters?

Voss: We want to make sure they have enough capital and surplus, but [P&C carriers' concern] is really a reinsurance issue, while the life companies are really concerned about international accounting standards. Still, that industry is looking at patterns of weather, and they're getting a lot of advice from reinsurers.

Reinsurers do a lot of modeling and testing, and they seem to be more interested in global warming and climate change, which ultimately affect their payouts. When the majority of Americans live within 100 miles of a coastline, that's where you're going to see some real rate spikes in some areas of the country.

Has the NAIC begun to examine the issues surrounding the use of social media for claims and underwriting purposes?

Voss: We're just starting to look at that at the NAIC. There's been some general discussion about what people put on their Facebook pages -- if that is public information, can it be used in regards to anything that you're regulating or when you're reviewing something? People have to be aware that that's out in the public.

Also, we're required to do rate hearings on health insurance, and we're required to get comments from the public. In one case, someone asked me a question on my personal Facebook account. People expect you now to respond quickly, so I took the opportunity to walk her through the process. I didn't even think about it until I'm halfway through this conversation -- the question becomes: Is that part of the public comment? The attorney general has ruled that anything you do in regards to your job with the state is a public record.

Does that mean the rate commenting process could be done through social media in the future?

Voss: We've talked about that, but we decided to continue with the anonymous model because we didn't want to hinder anybody.

What can we expect from insurance regulators in the near term?

Voss: There certainly are a lot of issues. Many years, we get focused on one issue. But this year and last year, we've got a lot of moving targets out there. Some stuff is sticking to the walls and some things aren't. It's not going to be a dull time, no matter who's regulating.

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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