Article
Updates from the National Association of Insurance Commissioners’ 2023 summer national meeting
Nov. 8, 2023 · Authored by Daniel E. Buttke, Jeff Maffitt, Brett Albers, David Spayde
This report summarizes key updates from selected task forces and working groups at the National Association of Insurance Commissioners (NAIC) 2023 summer national meeting. We encourage you to also review our separate report on statutory accounting updates from the 2023 summer national meeting.
Executive (EX) Committee
The committee adopted amendments to the Mortgage Guaranty Insurance Model Act (model 630), which removed Section 21 – No Private Right of Action in its entirety and the Nonadmitted Insurance Model Act (model 870) developed by the Surplus Lines Task Force in an effort to align provisions with the federal Nonadmitted and Reinsurance Reform Act of 2010.
The committee also received an update from the Accident and Sickness Insurance Minimum Standards subgroup on the Model Regulation to Implement the Accident and Sickness Insurance Minimum Standards Model Act (model 171), with the subgroup focusing on revisiting the proposed new subsection on short-term, limited-duration plans.
Climate and Resiliency (EX) Task Force
The Climate and Resiliency Task Force heard a presentation from the Arizona State University Global Futures Laboratory regarding their work on the rising global temperatures and the effects on rising sea levels and other catastrophic perils. The effects of rising global temperatures can be seen with the recent major wildfires in Australia in 2020 in which three billion animals were killed or displaced and over 46 million acres burned; as well as Hawaii in August 2023 in which over 100 people were killed and many more displaced from their homes. There have also been an increasing number of droughts, with the last two decades being the driest recorded since 800 A.D. These major events will continue to have negative impacts on the insurance market as catastrophic losses are incurred, highlighting the need for alternative energy sources and removing more carbon dioxide out of the atmosphere.
The Climate and Resiliency Task Force heard a presentation from Ceres regarding their study on inclusive insurance and a review of climate risk disclosures. Ceres is a nonprofit organization that works with market leaders to solve sustainability challenges such as protecting and restoring life, building a just and inclusive society and advancing climate solutions. Ceres presented on their recent report published in January 2023 related to inclusive insurance for climate-related disasters.
Ceres focused on how important disaster insurance is for recovery and that their studies have found that many people are uninsured against disasters or are unable to afford and find coverage that meets their needs. Ceres further presented on the barriers to inclusivity regarding disaster insurance and provided recommendations ranging from the federal or state policy level to the local government and private sector level to improve the inclusivity of disaster insurance.
The Climate and Resiliency Task Force heard a presentation from the California Department of Insurance regarding atmospheric river storms mainly impacting western states. Atmospheric rivers are large, narrow streams of water vapor that travel through the sky and on average are 1,600km long and 640km wide. These atmospheric rivers can result in a month’s worth of precipitation in a few days and account for more than half of California’s water supply while contributing to more than 90% of the state’s flood damages.
The California Department of Insurance recommended focusing on certain protection gaps and risk mitigation opportunities as atmospheric rivers are a growing source of insured and uninsured losses in the western part of the state.
The Solvency Workstream provided an update on their work which included addressing referrals and updating guidance. The Solvency Workstream is also focusing on an approach to handle scenario analysis and approaches used to provide valuable information to regulators. A draft referral is to be updated and exposed for public comment.
