December 12, 2017
The Statutory Accounting Principles Working Group met via conference on Nov. 6, 2017 and adopted various revisions prior to the meeting that will be incorporated into the March 2017 Accounting Practices and Procedures Manual. The only substantive revision impacted Statements of Statutory Accounting Principles No. 100R – Fair Value. All other revisions were nonsubstantive.
The National Association of Insurance Commissioners (NAIC) Model Acts and Model Regulations are adopted by the NAIC, and it is at the option of each domiciliary state to adopt such model into its state laws and regulations. If a model is adopted as a NAIC accreditation standard, it is no longer optional for the states and is required to be incorporated in each state’s laws and regulations within a specified time frame.
The fall NAIC meeting was held in Honolulu, Hawaii, Dec. 2 - 4. Two accreditation standards were adopted: the Corporate Governance Annual Disclosure Model Act (#305) and the Corporate Governance Annual Disclosure Model Regulation (#306), which require insurance companies to file an annual Corporate Governance Disclosure Form.
Certain other models were discussed as accreditation standards but deferred, including the 2014 revisions to the Insurance Holding Company System Regulatory Act (#440) as an update to the Part A: Holding Company Systems accreditation standard, and Model #787 for possible inclusion into the Part A: Laws and Regulations accreditation standard. Adoption of these models remains at each state’s discretion and, therefore, each insurer should check their state’s filing requirements.
Statutory Accounting Principles Working Group (SAPWG)
The SAPWG adopted the following revisions for incorporation into the March 2017 Accounting Practices and Procedures Manual. The revisions are effective immediately unless indicated.
Adopted the following substantive revisions to statutory accounting guidance:
Adopted the following nonsubstantive revisions to statutory accounting guidance (effective upon adoption unless date specifically noted):
Financial Regulation Standards and Accreditation (F) Committee (FRSAC)
The FRSAC considered each of the following proposed accreditation items during the hearing. Accreditation model acts would be adopted by all states in the near future if not previously adopted by your state as these items would become examination requirements. Each model act was adopted as an accreditation item, exposed or deferred action as noted below. Further detail, including meeting materials related to each of these items, is available from the NAIC or your Eide Bailly representative.
Adopted the Corporate Governance Annual Disclosure Model Act (#305) and the Corporate Governance Annual Disclosure Model Regulation (#306):
In completing the annual disclosure, the insurer may reference other existing documents (e.g., the Own Risk and Solvency Assessment (ORSA) Summary Report, holding company Form B or Form F filings, U.S. Securities and Exchange Commission (SEC) proxy statements, foreign regulatory reporting requirements, etc.) to the regulator in fulfillment of the information requested in various areas.
All information provided in the annual disclosure is recognized as being proprietary to the insurer and containing trade secrets. Therefore, confidentiality language was included in Model #305 stating that all such information is deemed confidential by law and privileged, is not subject to subpoena and is not subject to discovery or admissible in evidence in any private civil action. However, the domiciliary commissioner is authorized to use the documents, materials or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner’s official duties.
The accreditation standard will become effective Jan. 1, 2020.
Deferred Action until the 2018 Spring National Meeting: