NAIC Report - 2018 Spring National Meeting

by Eversheds Sutherland (US) LLP
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The National Association of Insurance Commissioners (NAIC) held its 2018 Spring National Meeting from March 24 through 27 in Milwaukee, Wisconsin. The winds off Lake Michigan were chilly, but the welcome was warm. The Spring National Meeting was the first in what is expected to be a busy year for the NAIC, and the meeting was very well attended by regulators and industry.  
 
In 2018, regulators are expected to adopt amendments to the NAIC Credit for Reinsurance Model Act and Regulation to implement the reinsurance provisions of the US-EU Covered Agreement, begin field testing a beta version of the group capital calculation tool, begin developing tools and resources to assist state insurance regulators in reviewing predictive models that use “big data,” and update risk-based capital (RBC) factors to address the impact of the 2017 Tax Reform Act.
 
The following are some highlights from the Spring National Meeting.  We do not cover every meeting in this report; rather, we comment on select noteworthy developments and matters of interest to our clients.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A. Issues of General Interest
 
1.  NAIC Focuses on Implementing Reinsurance Provisions of US-EU Covered Agreement
 
The Financial Condition (E) Committee adopted a number of recommendations that are designed to implement the reinsurance provisions of the Bilateral Agreement Between the United States of America and the European Union on Prudential Measures Regarding Insurance and Reinsurance (Covered Agreement). The recommendations follow a public hearing the NAIC held in New York on February 20, 2018, where industry representatives and other interested parties were asked to submit comments on issues presented by the Covered Agreement. 
 
The Covered Agreement eliminates US reinsurance collateral requirements for qualified reinsurers domiciled in EU member countries. It requires US states to implement new rules within five years. Otherwise, current state credit for reinsurance laws and regulations imposing such requirements will be pre-empted. For additional background on the Covered Agreement, see our Legal Alert.
 
The recommendations adopted in Milwaukee include adoption of a Model Law Development Request to amend the Credit for Reinsurance Model Law and Regulation (Credit for Reinsurance Models) to: (i) conform to the requirements in the Covered Agreement with respect to EU reinsurers (i.e., elimination of collateral requirements for qualified EU reinsurers), and (ii) provide reinsurers domiciled in NAIC qualified jurisdictions other than within the EU (currently, Bermuda, Japan, Switzerland and, after Brexit, the United Kingdom) with reinsurance collateral reductions similar to those to be implemented to comply with the Covered Agreement, including provisions regarding group supervision, group capital, information sharing and enforcement. 
 
Most of the interested parties who testified during the February hearing spoke in favor of extending the reinsurance collateral provisions of the Covered Agreement to NAIC qualified jurisdictions; however, US domestic insurers and their trade organizations have urged state regulators to ensure that comparable concessions are made by jurisdictions outside the EU before the benefits of the Covered Agreement are extended to reinsurers domiciled in those jurisdictions—specifically, mutual recognition of the US group supervision and group capital regimes. One issue that state regulators are expected to confront is how to obtain the necessary commitments from regulators in NAIC qualified jurisdictions (and how to enforce those commitments) without additional covered agreements, which state regulators strongly oppose.
 
The recommendations include proposed charges for a number of NAIC working groups and an NAIC task force to address potential issues presented by the reinsurance provisions of the Covered Agreement. These charges include:
  • The Qualified Jurisdiction (E) Working Group is directed to consider changes to the Process for Developing and Maintaining the NAIC List of Qualified Jurisdictions (last updated in 2014) to address the commitment and enforcement issue noted above.
  • The Reinsurance Financial Analysis (E) Working Group is directed to consider changes to its current methods of monitoring certified reinsurers domiciled in qualified jurisdictions.
  • The Capital Adequacy (E) Task Force is directed to consider changes to risk-based capital (RBC) formulas to address potential reinsurance credit risk issues.
  • The Statutory Accounting Principles (E) Working Group is directed to consider changes to Schedule F and corresponding annual financial statement pages.
All of the recommendations are scheduled to be completed by the 2018 Fall National Meeting. The Reinsurance Task Force has expressed that it hopes to have a working draft of proposed amendments to the Credit for Reinsurance Models by the 2018 Summer National Meeting. Technically, the recommendations still need to be adopted by the NAIC Executive (EX) Committee (which is scheduled to take up the recommendations during an April teleconference) but, in light of the tight timeline, NAIC staff is expected to begin working on revisions to the models while the recommendations are pending. Revisions will likely be influenced by proposed revisions that a number of interested parties submitted in advance of the February hearing.
 
2. Development of US Group Capital Calculation Tool Continues
 
The Group Capital Calculation (E) Working Group discussed comment letters received on an October 30, 2017, NAIC staff memorandum on the treatment of non-regulated entities in the group capital calculation. It was apparent that some commenters believe that the approach to non-regulated entities should align with domestic legal entity rules, while others believe it should be a complementary supervisory tool to enhance comparability within and across insurance groups. NAIC staff is to revise the memorandum based on the comment letters and the meeting. 
 
In response to persistent requests from interested parties, the Working Group released a February 28, 2018, memorandum setting forth a proposed approach to determining the “scope of the group” for purposes of applying the group capital calculation. This memorandum, which includes seven questions the Working Group would like commenters to answer, was exposed for a 45-day comment period.
 
The Working Group will continue to focus on developing the details of how a group capital calculation will consider specific items, such as the treatment of captives and non-regulated entities, and has set a goal of field-testing a beta version of the calculation by the end of 2018. 
 
3. Shifting Focus on Innovation, Technology and Cybersecurity
 
The Innovation and Technology (EX) Task Force continued to transition between initiatives following the adoption of the Insurance Data Security Model Law and the disbanding of the Cybersecurity Working Group last year. The charges of the now-defunct Cybersecurity Working Group were formally rolled up to the Task Force, which will address cybersecurity issues directly going forward. To that end, the Task Force received a report on progress of state adoption of the Model Law. South Carolina and Rhode Island were able to introduce bills to adopt the Model Law last year, despite the Model Law being finalized just last October. South Carolina’s bill is closest to adoption, with Commissioner Farmer stating that the bill had made it through most of the legislative process without any substantive deviations from the Model Law. Commissioner Barbara Richardson (NV) stated that she anticipates introducing a bill to adopt the Model Law in Nevada during the 2018 session. It remains to be seen whether states will be able to implement the Model Law without making substantial changes that would reduce uniformity across state lines.
 
Commissioner Elizabeth Dwyer (RI) suggested a new cybersecurity project for the Task Force—development of a standardized electronic data breach reporting tool that could help to streamline data breach reporting across multiple states. Members of the Task Force and interested parties expressed support for the idea. Commissioners Dwyer and Farmer will spearhead this new initiative, and interested parties are to direct comments to them.
 
The Task Force also continued to discuss approaches to regulatory sandboxes to support the development of new products and services that may not align with current regulatory restrictions. 
 
4. Regulators Take Steps to Facilitate Review of Predictive Models
 
The Big Data (EX) Working Group focused on its charge to develop a proposal to aid state review of complex predictive models for personal auto and homeowners insurance rate filings. The goal is to find ways the NAIC can provide needed resources to state insurance regulators to review new and changing predictive models that use big data and non-traditional data sources to support rate filings. 
 
As in previous meetings, discussion was driven by industry concerns that developing shared NAIC resources to support state rate filing reviews could lead to an inappropriate delegation of authority to the NAIC. Nonetheless, the Working Group has repeatedly cited the need to develop shared technical expertise and actuarial resources so that state insurance regulators will be equipped with the basic tools necessary to effectively review predictive models. 
 
Commissioner Todd Kiser (UT) emphasized this point again during the meeting, noting that while some current rate filings in Utah might violate state law, the department lacks the expertise to understand the technical aspects of the filings based on complex models. Commissioner Kiser also stated that if the NAIC cannot develop shared resources to support joint reviews, Utah would need to impose an additional assessment on regulated entities to develop similar resources internally.
 
While discussions on this issue continued to be contentious, the Big Data (EX) Working Group and the Innovation and Technology (EX) Task Force pushed the development of shared resources forward by approving two referrals. The first requested that the Casualty Actuarial and Statistical (C) Task Force adopt the following charges:
  • Draft and propose changes to the Product Filing Review Handbook to include best practices for review of predictive models and analytics filed by insurers to justify rates. 
  • Draft and propose state guidance (e.g., information, data) for rate filings that are based on complex predictive models.
  • Facilitate training and the sharing of expertise through predictive analytics webinars.
The second requested the Executive (EX) Committee to: 
  • Direct NAIC management to research the appropriate skills and potential resources required for the organization to support NAIC members reviewing predictive models and make appropriate recommendations to the Executive (EX) Committee and the Internal Administration (EX1) Subcommittee.
  • Direct the NAIC Legal Division to prepare a memorandum analyzing methods and procedures to be followed in sharing predictive modeling information while maintaining confidentiality protections.
The Property and Casualty (C) Committee and Executive (Ex) Committee, respectively, will consider these referrals. If approved, the NAIC will begin to take steps to build a framework and guidance for sharing resources and information among state insurance regulators related to the review of complex predictive models.
 
B. Issues of Particular Interest to Life Insurers
 
1. NAIC Evaluating Changes to Life RBC Factors to Address Tax Reform
 
The Capital Adequacy (E) Task Force and its RBC working groups are evaluating changes to RBC factors that may be necessary as a result of the 2017 Tax Reform Act—in particular, the reduction of the corporate tax rate from 35% to 21% (for an overview of the provisions of the Tax Reform Act impacting insurance companies, see our Legal Alert). RBC levels for life insurers are expected to be the most significantly impacted, with the American Council of Life Insurers (ACLI) estimating that some life insurers could see a decline in RBC of up to 20%. 
 
During the Spring National Meeting, the Life Risk-Based Capital (E) Working Group heard presentations from the American Academy of Actuaries and ACLI on the implications of the Tax Reform Act on life insurer RBC, as well as their proposals for how to implement the necessary changes to the life RBC formula. At the most basic level, the reduction in the corporate tax rate results in an increase in an insurer’s required RBC level because RBC calculates an insurer’s required capital on an after-tax basis following a loss, so a reduction in the tax rate results in a reduced tax offset for any loss incurred by the insurer. This general principle impacts a number of RBC factors, resulting in an overall decrease in insurers’ RBC levels (while the net effect for some RBC factors may be positive, that is more than offset by the negative effect on other factors).
 
It is still unclear whether the changes to the life RBC factors will be implemented in time for 2018 RBC filings (filed in 2019), for 2019 RBC filings or some combination. One relevant factor is the NAIC’s unrelated plan to update C-1 bond factors in 2019, which is also expected to increase required RBC levels. Some may see a benefit in gradually introducing the increased RBC requirements, while others (including ACLI) would prefer to limit the discontinuity to a single year.

Speaking during the Financial Condition (E) Committee meeting, Committee Chair, Commissioner David Altmaier (FL), recognized that, given the magnitude of the changes needed, a 2019 effective date is likely. 
 
2. Fifth Circuit Decision on DOL Fiduciary Rule Disrupts Working Group Agenda
 
The original agenda for the Annuity Suitability (A) Working Group meeting in Milwaukee was to continue a section-by-section review of comments received on the draft amendments to the Suitability in Annuity Transactions Model Regulation. However, on March 15, the US Court of Appeals for the Fifth Circuit issued a decision vacating the entire Department of Labor fiduciary regulation (DOL Rule). For more information regarding the impact of the Fifth Circuit Decision on the DOL Rule, see our Legal Alert
 
This development caused a shift in the Working Group’s March 24 meeting agenda. Instead, Director Dean Cameron (ID), Chairman of the Working Group, and Commissioner Doug Ommen (IA), Vice Chair, asked NAIC counsel to provide the Working Group with an analysis of the Fifth Circuit decision. Comments were solicited from interested parties about the impact of the decision. 
 
All agreed that the Fifth Circuit decision gives the NAIC an opportunity to pause and, rather than react to the DOL Rule, objectively identify the gaps and deficiencies in the current Model Regulation and determine where appropriate changes can be made. Most interested parties welcomed a “reset,” and all reaffirmed their commitment to work cooperatively with the NAIC on this effort. Based on questions raised by Working Group member James Regalbuto, Deputy Superintendent of the Life Bureau at the New York Department of Financial Services, it appears that the New York Department will proceed with its proposed amendments to New York’s suitability regulation. 
 
Noting that SEC Chairman Jay Clayton has said the SEC intends to move forward expeditiously with a best interest standard for broker-dealers and investment advisers, Director Cameron and Commissioner Ommen expressed their intention to continue moving forward as well, but with a more consumer-focused, process-oriented approach. In anticipation of the SEC releasing a proposal by the end of the second quarter, Director Cameron and Commissioner Ommen said they would like to have something for NAIC leadership to review in the next few months. 
 
As a result, the Working Group decided to re-open the Suitability in Annuity Transactions Model Regulation for a 30-day public comment period. The Working Group Co-Chairs said they would like to receive specific comments on any suggested revisions to the model that would establish a best interest/consumer-focused approach and/or process for the sale of annuity products to consumers. The Working Group requested specific line-by-line revisions to the model, as well as general principles. An in-person meeting will be held sometime in May to discuss and review comments received.
 
3. Amended Life and Health Insurance Guaranty Association Model Act
 
Following on the adoption of amendments to the Life and Health Insurance Guaranty Association Model Act during the 2017 Winter National Meeting, the Financial Regulation Standards and Accreditation (F) Committee discussed whether the 2017 amendments should be a state accreditation standard.
 
Most notably, the 2017 amendments served to: (i) expand the assessment base for long-term care insurance (LTC) policies; (ii) add HMOs to the assessment base; (iii) split the liability for an LTC insolvency by allocating 50% to life and annuity companies and 50% to health insurance companies; and (iv) clarify that guaranty associations have the authority to file for premium rate increases. 
 
Background. The changes reflected in the amended Model Act arose from negotiations between the life insurance industry and major medical writers, in the wake of the Penn Treaty insolvency, after major medical writers in Colorado pushed to “realign” the way assessments are made for LTC to shift some of the burden from health carriers to life and annuity writers. Ultimately, the life and health carriers agreed to a 50/50 split, with the inclusion of HMOs.
 
The Committee decided that the 2017 amendments to the Model Act should not be a state accreditation standard. This likely comes as good news to states, such as Washington, that have expressed skepticism about their ability to enact the amended Model Act due to concerns about how it could impact their particular state health markets. However, the decision also makes it less likely that states implementing the revisions to the Model Act will do so uniformly.
 
C. Issues of Particular Interest to Property/Casualty Insurers
 
1. Surplus Lines – Revised IID Plan of Operation Adopted
 
The NAIC adopted revisions to the International Insurers Department (IID) Plan of Operation, which provides requirements and guidelines for inclusion of non-US or “alien” insurers on the IID’s Quarterly Listing of Alien Insurers (Quarterly Listing). The most noteworthy changes to the Plan of Operation are: (i) an increase of the “soft cap” (explained below) on the minimum required funding for trusts held by IID-Listed insurers to $250 million (from $150 million); and (ii) the creation of an internal review committee within the IID to analyze and make recommendations with respect to applications, appeals and de-listings of IID-Listed insurers. 
 
Background. Pursuant to the Nonadmitted and Reinsurance Reform Act of 2010 (NRRA), no state may prohibit a surplus lines broker from placing nonadmitted insurance with, or procuring nonadmitted insurance from, a nonadmitted insurer domiciled outside of the United States that is listed on the Quarterly Listing. As a result, the IID is the primary gatekeeper for alien insurers seeking nationwide eligibility to write surplus lines risks in the United States, and the requirements for the Quarterly Listing set forth in the IID Plan of Operation are effectively the sole requirements for nationwide eligibility.
 
The IID Plan of Operation, which was last updated in 2012, requires that an IID-Listed insurer maintain a US trust account on behalf of US policyholders (the IID Trust Account) funded at an “appropriate level” with cash, securities meeting certain requirements prescribed by the IID via the IID Standard Form Trust Agreement, or an acceptable letter of credit. IID-Listed insurers are required to maintain assets in the trust in an amount (the Trust Fund Minimum Amount) determined by a sliding scale based on the insurer’s US gross surplus lines liabilities (ranging from 15% to 30%), subject to a cap of $250 million and a floor of $5.4 million (Lloyd’s syndicates are not subject to the cap). Notwithstanding this cap, the IID retains ultimate authority under the Plan of Operation to determine what constitutes an “appropriate level” of funding based on a number of factors (including the types and amounts of coverage that the insurer writes), thus the reference to a “soft” cap. 
 
The next step for the Surplus Lines (C) Working Group is to consider revisions to the IID Standard Form Trust Agreement, which all IID-Listed insurers are required to use. The Standard Form Trust Agreement, which was last revised in 2007 (prior to enactment of the NRRA), prescribes the terms governing IID Trust Accounts, including the type and quality of securities that may be held in IID Trust Accounts.
 
2. Update on Meetings Related to Workers’ Compensation
 
The Receivership Large Deductible Workers’ Compensation (E) Working Group received a presentation on large deductible policies in insurer insolvencies. The presenters drew on the experience of the National Conference of Insurance Guaranty Funds (NCIGF), and they commented on challenges that large deductible policies have presented in receiverships that can be addressed by legislative fixes reflected in the current NAIC Insurance Receivership Model Act and the NCIGF’s model legislation. 
 
Under a large deductible policy, the insurer is liable for all workers’ compensation benefits from first dollar, subject to reimbursement of a specified deductible amount by the policyholder. The policy is often accompanied by side agreements that address reimbursement mechanisms, claims handing and loss funding. 
 
The problems guaranty funds have seen are with insolvent smaller and mid-sized insurers that wrote large deductible programs. Factors contributing to these problems include unusual and ineffective underwriting and program documentation practices, collateral that is insufficient or in the control of a managing general agent (MGA) or program manager, and claims that were improperly reserved. 
 
Questions large deductible policies present for receivers include who collects reimbursements, who handles claims, what happens to the insured’s collateral and who is entitled to the reimbursements. The presenters commented that these issues are addressed by the NAIC Model Act and legislation enacted in eleven states. 
 
The presenters noted the “added wrinkle” posed by Professional Employer Organizations (PEO) that serve as employer and maintain workers’ compensation coverage for their small and mid-sized business customers. They noted that PEOs can have policies with deductibles up to $1 million per claim with no aggregate limits; the PEOs then sell smaller deductibles to their customers and retain financial risk on the deductible gap. The problems PEOs have posed include insufficient reserves, understated ultimate losses, collateral that is intermingled or in control of a program manager or MGA, and collateral that is often insufficient or unavailable. They noted some PEOs also have cross-ownership with the MGA and third-party administrator (TPA). 
 
The presenters noted that legislation enacted in Illinois and the NCIGF model legislation reflect one approach to address the problems large deductible policies have posed. This legislation requires full collateralization for policies sold by insurers with less than $200 million in surplus and an A.M. Best rating lower than “A-”, limits the amount of the per claim deductible in relation to the policyholder’s net worth and specifies the form of collateral.
 
The Workers’ Compensation (C) Task Force received three reports. It received a report from the National Council on Compensation Insurance (NCCI) regarding the discovery of a programming error in the software used to calculate excess loss factors. NCCI reported it identified and corrected the error and found it to be actuarially insignificant. Not every regulator was satisfied with this report and at least one asked for a more detailed explanation. 
 
The Task Force also received a report on current medical marijuana issues. The issues for workers’ compensation insurers are wide-ranging. Some states allow for reimbursement for medical marijuana, while others exclude it. Marijuana-related businesses now need workers’ compensation insurance in states where it is legal and they present workplace hazards that automated underwriting processes may not identify (e.g., robbery, ingestion, inadvertent inhalation). In some states, there may be a clash between permitted medical marijuana use and employer practices requiring testing. 
 
The Task Force also received a presentation from the International Association of Industrial Accident Boards and Commissions (IAIABC) regarding portable benefits and how workers’ compensation will exist in the future given the changing nature of work, employment relationships and the law, which the IAIABC believes is based on a single, full-time, life-time employer system that is far less prevalent today. 
 
3. Lender-Placed Insurance Model Act
 
The Lender-Placed Insurance Model Act (C) Working Group did not meet in Milwaukee, but the Working Group held a conference call on March 13, 2018, to discuss the draft Real Property Lender-Placed Insurance Model Act. An initial draft of the Model Act was developed by the Florida Office of Insurance Regulation based on discussions of the Working Group over the last several years, and in response to perceived consumer-protection issues related to lender-placed insurance.
 
Background. Lender-placed insurance is insurance placed on a home by a bank or mortgage servicer when the homeowner does not maintain valid or sufficient insurance based on the terms of the mortgage agreement. If a homeowner’s insurance policy lapses and is not replaced, many mortgage agreements allow the lender to purchase insurance on the home and require the borrower to pay the premiums. Following the 2008 real estate market crash, consumer groups and regulators raised concerns over the often high premiums and limited coverage provided under lender-placed insurance, as well as the perceived lack of incentives for lenders to select the best policies for the borrowers. The Working Group, which was formed following a 2012 NAIC public hearing on the subject, is charged with drafting a new model law to address these issues.
 
The current draft of the Model Act contains provisions relating to required terms for lender-placed insurance policies, the calculation of premiums, and rate and form filing requirements, and it sets forth prohibited practices with respect to lender-placed insurance. On the March 13 call, the Working Group discussed a written mark-up of the draft Model Act provided by the Center for Economic Justice, which, among other things, includes provisions limiting a lender’s financial interest in a policy and revises the frequency of rate filings from four to two years. 
 
The Working Group has exposed the draft Model Act for a 45-day public comment period. The Model Act is expected to be finalized in time for a vote by the Executive (EX) Committee and Plenary at the 2018 Fall National Meeting.
 
4. 2018 TRIA Reporting Deadlines Approaching
 
The Terrorism Insurance Implementation (C) Working Group received a progress report on federal and state activities related to terrorism insurance, including the terrorism risk insurance data call for 2018. Progress has indeed been made. For the first time, state insurance regulators and the Treasury Department have agreed on a consolidated approach to collecting data related to terrorism risk insurance. The consolidated approach allows companies subject to both the federal and state data calls to submit the same information to Treasury and the states (although a State Property Supplement is still required for non-exempt insurers writing property coverage, and the IID will continue to issue a separate terrorism risk data call for alien surplus lines insurers).
 
Background. Section 111 of the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) (which reauthorized the Terrorism Risk Insurance Act (TRIA) through 2020) requires the US Treasury Department to collect data and provide an annual report to Congress on the state of the terrorism insurance market and the effectiveness of the TRIA Program. The Treasury Department issued its first terrorism risk insurance data call in 2016 (on a voluntary basis) and another in 2017. State insurance regulators also issued their own terrorism risk data calls in 2016 and 2017. Industry representatives decried the inefficiency of separate and largely overlapping data calls.
 
For 2018, data will be collected in two parts, through a Joint Reporting Template and a State Property Supplement. Once completed, the Joint Reporting Template and the State Property Supplement must be submitted through an electronic portal maintained by the New York Department of Financial Services. The deadline for completing the Joint Reporting Template is May 15, 2018 (but note that insurers must register in advance to obtain the appropriate Joint Reporting Template), and the deadline for completing the State Property Supplement is September 30, 2018.
 
D. Briefly Noted
 
1. NAIC Launches “State Ahead” Strategic Plan
 
The NAIC officially launched its “State Ahead” Strategic Plan for 2020 on February 7, 2018. The plan is focused on three core themes: (i) Safe, Solvent and Stable Markets; (ii) Consumer Protection and Education; and (iii) Superior Member Services and Resources. It emphasizes supporting these themes through ongoing investments in data, technology and talent to build the NAIC “as a nexus for innovation and a hub of resources for insurance departments to draw upon.” The Plan contemplates that the NAIC will make a significant financial investment in the technological services the NAIC provides to state insurance regulators, with the budget allocating “new fiscals” of approximately $13 million for tech-related initiatives. 
 
2. Timeline for Completion of Travel Insurance Model Act Extended to Summer 2018
 
The Travel Insurance (C) Working Group continues its work to develop a Travel Insurance Model Act. As currently proposed, the Model Act addresses producer licensing requirements, disclosure requirements, premium taxes and sales practices in connection with the sale of travel insurance. The Working Group originally planned to complete its work in time for the Spring National Meeting, but the Model Act is now expected to be ready for presentation to the Property and Casualty Insurance (C) Committee prior to the 2018 Summer National Meeting. 
 
3. NFIP Extension
 
On March 23, authorization of the National Flood Insurance Program (NFIP) was extended to July 31, 2018, as part of the $1.3 trillion omnibus spending bill that the President signed. Advocates for NFIP reform continue to be hopeful that long-term reauthorization and reform of the program will be forthcoming.

In November 2017, the House of Representatives passed H.R. 2874, the 21st Century Flood Reform Act, which is a package of bills that would renew the NFIP for five years and includes a number of reforms, including provisions seeking to encourage growth of the private flood insurance market and improve flood mapping. The 21st Century Flood Reform Act includes the Flood Insurance Market Parity and Modernization Act, which the NAIC has been advocating. The Senate has not yet acted on the bill. 
 
4. IAIS Works to Update ComFrame Materials 
 
The International Insurance Relations (G) Committee heard updates on activities at the International Association of Insurance Supervisors (IAIS), including work to update ComFrame (the Common Framework for the Supervision of Internationally Active Insurance Groups) supervisory materials and the 2018 list of global systemically important insurers (G-SIIs).
 
Since January, the NAIC has submitted comments to the IAIS on a number of consultations related to ComFrame supervisory materials, including with respect to revisions to Insurance Core Principle (ICP) 8 (Risk Management and Internal Controls), ICP 15 (Investments), ICP 16 (Enterprise Risk Management for Solvency Purposes), and the Financial Stability Board’s (FSB) Key Attributes Assessment Methodology for the Insurance Sector consultation document. These consultations are expected to result in IAIS issuing updated ComFrame materials in the next several months.
 
In February, the NAIC also submitted comments on an interim IAIS consultation document regarding the Activities-Based Approach to systemic risk, which describes key steps of the IAIS’s proposed Activities-Based Approach and solicits input from IAIS members and stakeholders to assist the IAIS with developing a more detailed proposal for consultation later in 2018. In November 2017, the Financial Stability Board (FSB), in consultation with the IAIS, announced that it would not be publishing its annual list of G-SIIs for 2017 in light of the IAIS’s ongoing work on the Activities-Based Approach. 
It was reported in Milwaukee that the IAIS expects to make a recommendation to the FSB “shortly” on how to approach the G-SII list for 2018.
 
5. Updated State Accreditation Standards
 
The Financial Regulation Standards and Accreditation (F) Committee adopted the 2014 revisions to the Insurance Holding Company System Regulatory Act as an accreditation requirement, effective January 1, 2020. The revised Model Act provides authority to a designated state to act as a group-wide supervisor for an Internationally Active Insurance Group (IAIG).
 
6. New Independent Insurance Expert Appointed to FSOC
 
On March 21, 2018, the Senate confirmed the nomination of Thomas Workman as the independent voting member with insurance expertise on the Financial Stability Oversight Council (FSOC). Mr. Workman was sworn in by Treasury Secretary Steven Mnuchin on March 29. The independent member with insurance expertise is the only voting member of FSOC appointed by the President. Other voting members of FSOC serve by virtue of their positions as heads of various federal regulatory agencies. 
 
Mr. Workman, who was appointed to a six-year term, previously served as President and CEO of the Life Insurance Council of New York Inc. (LICONY) from 1999 to 2016. He replaces Roy Woodall, who has served on FSOC since 2011.
 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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