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Committee approves insurance holding-company rules tied to NAIC accreditation
Summary
The committee approved regulatory language giving the Department of Insurance tools to assess group capital and liquidity at insurer holding-company levels and to standardize receivership procedures to meet NAIC accreditation standards.
The House Regulations and Administrative Procedures Artificial Intelligence and Cybersecurity Committee approved an insurance-industry regulatory package intended to strengthen solvency oversight at group holding-company levels and to meet a National Association of Insurance Commissioners (NAIC) accreditation standard.
The regulation (document 5320) creates a group capital calculation and a liquidity stress-test framework for the Department of Insurance to evaluate risks at insurance holding-company groups. The rule also establishes procedures for receivership — including requirements about who must continue providing essential services and what data and records a receiver may access — and includes exemptions aimed at reducing burden on smaller carriers. The subcommittee recommended approval.
Michael Wise, identified on the record as agency director at the Department of Insurance, described the intent: "The idea here is to look at how they're connected together to make sure that they have enough money on hand to be solvent, to be able to pay claims as they come due," and to use liquidity stress tests to gauge resilience in adverse scenarios such as many hurricanes. Wise said the changes are needed for the department to maintain NAIC accreditation.
Committee members asked how many insurers are domesticated in-state and how often companies become insolvent. Wise said thousands of companies operate in the state, and that domesticated insurers are in the "high thirties, low forties" with 38 the number that "comes into my mind." He told the panel insolvency of domesticated carriers is rare: "It's not often... there's not 1 a year or anything like that. It's rare."
The committee recorded approval for document 5320; the subcommittee's recommendation and the agency presentation provided the record for the decision.
The rule package applies primarily to larger holding-company groups, with scaled exceptions for smaller firms, and is framed as part of maintaining the state's solvency-regulation accreditation with the NAIC.
