Property and Casualty Insurance (C) Committee
Property and Casualty Insurance (C) Committee Page
Joint Executive (EX) / Plenary Committee Summary Report
Summer 2009 Meeting Summaries Index

The Property and Casualty Insurance (C) Committee met June 15, 2009.

During this meeting, the Committee:

• Adopted the white paper, Natural Catastrophic Risk: Creating a Comprehensive National Plan. Some states and interested parties thought part of the white paper was misleading. Therefore, the paper includes a caveat stating that it contains various perspectives on preparing the U.S. and the various states for natural catastrophes, and the various perspectives are presented to demonstrate the diversity of views on this important topic.
• Heard a presentation on a Federal Guarantee of Post Event Debt. Since seven of the 10 most costly catastrophes occurred since 2004, the presenters were supporters of Senate Bill 886, the Catastrophe Obligation Guarantee Act. This bill would establish a program to provide guarantees for debt issued by state catastrophe insurance programs to assist in financial recovery from natural catastrophes. There are many areas within the country where there is an availability and affordability problem related to insurance for large unpredictable losses. The nation is faced with a public policy issue on how to help homeowners recover after a devastating loss. The presenters indicated that most plans today deal with catastrophe problems by dealing with the funding problem before there is a disaster. Senate Bill 886 would cost taxpayers the least and provide the best benefit, as it would provide limited guarantees and funding certainty after a loss occurs.
• Heard about the need to form a working group to consider changes to the Risk Retention and Purchasing Group Handbook related to recent court cases and to include corporate governance standards. A working group was appointed, and members were encouraged to contact NAIC staff if they have an interest in serving on the working group.
• Was advised that a referral from the Receivership and Insolvency (E) Task Force will be considered at the Fall National Meeting regarding Directors and Officers (D&O) contract language. Some D&O coverage today excludes guaranty funds and receiverships. The NAIC Legal Division is currently working on this issue with the Illinois Department of Insurance.
• Heard an update on credit-based insurance scoring activity. The Committee and the Market Regulation and Consumer Affairs (D) Committee held a hearing April 30. On June 15, several presenters expressed their varying views on whether to continue with the status quo, make changes to existing laws, or to have a moratorium on the use of insurance scores due to the current economy and the economy’s impact on insurance scores today. The National Conference of Insurance Legislators (NCOIL) is currently drafting changes to its model law and anticipates that further changes will be considered during its upcoming meeting. Members and interested parties were encouraged to submit suggestions for the next steps to the joint committees to consider by June 30.
• Heard an update on the report of the catastrophe model feasibility study. The report will include the feasibility of building a national hurricane model and a national earthquake model. The model would be of commercial grade, comparable to vendor models. Insurers would be able to access the model and run analyses on a secure, Web-based system. The consultants’ final study will estimate costs for assessing losses at both the ZIP Code level and geocode level. The study will also include a section detailing possible alternatives to building a national model. The pilot states study group will use the consultants’ feasibility study in preparing a final report that will summarize the scope, costs, and timeline of the model, as well as examining how states would use the model and possible funding mechanisms for the model. This final report is expected to be issued to the Internal Administration (EX1) Subcommittee by the end of July.
• Heard an update on P/C model rating laws. The Speed to Market (EX) Task Force recently recommended that the two current model rating laws, one for prior approval and the other for file and use, be converted to model guidelines. Another draft model developed by the Committee in 2000 titled Property and Casualty Rate and Policy Form Model Law will need to be reviewed by the Committee and considered as a model guideline. The Committee will consider whether to appoint a working group at a later date.
• Adopted minutes of the April 16 conference call.
• Adopted reports of the following task forces and working groups: Casualty Actuarial and Statistical Task Force, Surplus Lines Task Force, Workers’ Compensation Task Force, Advisory Organization Examination Oversight Working Group, Catastrophe Insurance Working Group, Catastrophe Reserve Working Group, Consumer Guides Working Group, Crop Insurance Working Group, Earthquake Study Group, Terrorism Insurance Implementation Working Group, and Title Insurance Issues Working Group.

Action Items:

• Adopted the white paper Natural Catastrophic Risk: Creating a Comprehensive National Plan.
• Adopted April 16 conference call minutes.
• Adopted reports of Committee task forces and working groups.
• Within the Casualty Actuarial and Statistical Task Force, the Committee adopted letters to send to annual statement vendors and company reporting contacts. Instructions will be given that the Actuarial Opinion data reporting requirements require the data submission to match the Appointed Actuary’s Statement of Actuarial Opinion data exhibits.
• Within the Title Insurance Issues Working Group, the Committee adopted three proposals that were submitted to the Blanks (E) Working Group regarding the title Annual Statement Blank.