FACI – December	3,	2020

COVID-19	Pandemic – Preparedness Subcommittee Meeting

I. Emerging	Lessons	

As the COVID-19 pandemic continues, the Subcommittee has reviewed a	wide variety of

actions both federal and state regulators have taken to better serve consumers in these

challenging circumstances. Overall, there are a	host	of specific examples that	policymakers

should consider in any future situations where moving to a	more contactless method of

conducting business becomes immediately necessary.

At	the federal level, the Department	of Labor (DOL), the Securities and Exchange

Commission	(SEC), and the Department	of Homeland Security (DHS) took actions to address

COVID-19 related challenges. The DOL and the SEC made significant	modifications that	any

policymaker should consider in the future and the DHS developed a	list	of critical essential

business services that	should be allowed to operate during a	pandemic to help provide

consistency to state emergency considerations.	The National Association of Insurance

Commissioners	(NAIC) helped to coordinate the state insurance response and relief efforts,

including educational resources, uniform data	collection, and other regulatory relief items. Of	

course, the COVID-19 pandemic continues and Congress, federal agencies, the NAIC, and state

insurance regulators and lawmakers may need to address new challenges.

U.S.	Department	of	Labor

In conjunction with the President’s Coronavirus (COVID) emergency declaration on

March 13, 2020, the DOL recognized that	the COVID-19 outbreak may impede certain

requirements and deadlines established	under the Employee Retirement	Income Security Act	of

1974	(ERISA).	In April, the DOL coordinated with the Department	of Treasury and the

Department	of Health and Human Services to extend the time for plan officials to furnish

benefit	statements, annual funding notices, and other notices, so long as a	good faith effort	was

made to furnish the documents as administratively practicable. This flexibility was provided for

60 days and allowed participants and beneficiaries additional time to make important	health

coverage decisions, among other matters.

At	the end of May, DOL provided additional help to ERISA plan participants by finalizing

a	rule on the use of electronic delivery (“e-delivery”) for certain documents. The rule took

effect	on July 27, 2020. Retirement	plan administrators can now electronically notify

participants and beneficiaries that	certain disclosures are available on a	specified website. In

addition, retirement	plan administrators can more easily directly deliver disclosures by email.

U.S.	Securities	and	Exchange	Commission

In light	of the COVID pandemic, the SEC issued a	statement	in March allowing flexibility

on manual signatures for filing certain forms under 302(b). The SEC also provided guidance for
	 	 	 	 	 	 	 	 	 	 	

		 	 	 	 	 	 	 	 	

	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 		

	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	

	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

conducting shareholder meetings during COVID-19, and allowed electronic proxy deliveries to

complement	mailing requirements. Furthermore, the SEC allowed for additional flexibility for

online filings and notarizations.								

U.S.	Department	of	Homeland	Security

Due in part	to the growing number of states issuing “stay at	home” orders and limiting

certain business operations in the spring, DHS’s Cybersecurity and Infrastructure Security

Agency	issued guidance in April on what	businesses should be considered critical infrastructure

and be allowed to operate during the pandemic. This document	included insurance as a	part	of

the critical U.S. financial services infrastructure workforce deemed “essential services.”

National Association of Insurance Commissioners

At	the state level, the NAIC took actions to organize and address COVID-19 related

challenges focusing on three critical areas: protecting insurance consumers, ensuring stability in

the insurance market, and delivering exceptional service.	Consumer protection included

educational resources about	the impact	of the pandemic on insurance lines, mitigating the

impact	of COVID-19, and warnings consumers about	potential fraud risks. Coordinated data	

collection on business interruption insurance facilitated as well as surveys on the pandemic’s

impacts, adjusting regulations to reflect	challenges, and coordinating with federal and

international regulators on the global response to pandemic impacts made for efficiency and

expediency.	Several actions, such as adjusting NAIC software to streamline process and enable

remote business operations and virtual platforms, better enabled regulators and the industry to

collaborate and coordinate during the crisis while ensuring continued insurance operations and

customer engagement	during the pandemic.

Education and Resources

The NAIC established a	Coronavirus Resource Center and outreach program to support	

the public, business community and insurance professionals understand and manage the risks

of the current	outbreak of COVID-19.	This	website has access to third-party information and

resources as well as information specifically created by the NAIC such as thousands of related

state bulletins and alerts, insurance policy coverage and other resources for consumers as well

as for the industry. Information related to coverages and exclusions, and alerts to protect	

consumers and ensure market	solvency were	included.	

Data Collection

In response to state regulator desires for timely information and data	on the pandemic’s

impact	on the insurance industry, the NAIC, in conjunction with regulators and industry,

created a	uniform data	collection survey for state regulators to utilize.	The data	collection

survey was intended to minimize individual state collections and potential administrative	

burdens	on insurers, while providing meaningful data	and insight	to regulators. It	has been
	 	 	 	 	 	 	 	 	 	 	 	 	

	 		

	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 		

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 		

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

largely successful and should serve as a	future model for data	collection during a	pandemic or

similar emergency.

Accounting and Reporting Guidance

The NAIC also resolved reporting questions for the treatment	of overdue mortgages and

extended the due dates of quarterly filings to provide some relief and guidance for insurers

and, by extension, business owners. By allowing more time for the insurers to collect premiums	

before reporting the payments as late, these premium receivables weren’t	treated as nonadmitted assets in statutory financial statements.

The NAIC also addressed accounting issues related to auto insurer’s refunds, rate

reductions, and policy dividends to consumers based on less driving due to shutdowns. The

default	methodology would be to record it	as a	reduction in premium and the guidance also

offered flexibility for insurers that	prefer to report	through expenses in a	one-time exception.

Notably, an NAIC committee began working on the Standard Nonforfeiture Law for

Individual Deferred Annuities to drop the standard minimum nonforfeiture interest	rate for

individual deferred annuities from 1% to 0%, given the decreases in interest	rates made in	

response to COVID-19.

These responses all better enabled regulators and the industry to operate and weather the

pandemic’s impacts while serving consumers.

Recommendation

As the pandemic continues, it	is clear that	DOL, SEC, DHS and NAIC/state regulatory

relief actions were helpful given the circumstances. This pandemic has and continues to present	

unprecedented and unique challenges to both consumers and the insurance industry that	

serves them. Essential business, for the first	time, needed to operate almost	completely

remotely. Any physical contact	between consumers and firms that	typically provide them with

everything from health coverage to investment	advice became high risk and in many cases

would have violated stay-at-home orders across the country.

The Subcommittee recommends that	FIO should reiterate the importance of insurance

being deemed a	business essential service and encourage federal and state regulators to allow

for regulatory compliance efficiencies, coordinate, or take similar relief actions during a	future

pandemic or emergency, while ensuring consumers and investors continue to have timely

access to critical services and information.		

Therefore, as the pandemic continues, it	is clear that	the aforementioned SEC and DOL

actions were helpful given the circumstances. However, as we continue to confront	the

challenges of this pandemic and develop better ways to prepare for future crises and

pandemics, both industry and regulators will need to plan to confront	these challenges as part	

of	resiliency planning for uninterrupted regulatory oversight	and approvals as well as ongoing
	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 			

	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

business operations. These plans and preparations should include solutions so industry and

regulators can operate as normally as possible, with the understanding that	future crises	may

also have unique qualities that	will still require regulatory relief and unanticipated solutions.

II. Ensuring Resiliency in the Event of a Pandemic

When regulators and companies faced the sudden and wide-ranging impacts of the

pandemic, significant	and long-lasting adaptations were needed to ensure uninterrupted

regulatory oversight	and approvals as well as ongoing business operations. Some of these were

operational, such as creating safe and efficient	ways for staff to conduct	work in-person	or

remotely and dealing with increased absenteeism. Other challenges related to resource

allocation in order to deal with both the change in operational capacity and new priorities, such

as regulators needing to direct	more resources toward health insurance coverage issues or

companies responding to an influx of requests for extending payment	grace periods and other

individual policy changes. While many regulators and companies adapted well, most	would

agree that	there were elements of the pandemic for which they had not	planned and decisions

that	had to be made in the moment	without	reference to a	previously developed strategy.

The Subcommittee recommends that	FIO encourage regulatory agencies and insurers that	

have not	already done so, either voluntarily or for purposes of satisfying regulatory

requirements (e.g., ORSA), to develop strategies that	address the key organizational challenges

a	pandemic poses in preparation for a	future event.	This may be done either as part	of a	

broader business continuity plan, disaster plan, or a	unique pandemic plan. Such a plan should:

• Identify programs that	can be undertaken in advance of a	pandemic that	would diminish

its impact	on the organization and allow for the continuation of essential services;

• Present	strategies for responding to operational challenges created by a	pandemic,

including a	need for remote working, identification of essential staff, and redeployment	

of staff to key functions, among others;

• Determine critical interdependencies with external entities and steps to support	them

during a	pandemic; and

• Provide guidance for prioritizing the allocation of resources in the event	that	a	pandemic

diminishes an organization’s capacity for an extended time period or place new

demands on the organization that	compete with other priorities or obligations it	has in
	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 			

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 		

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	

	 	 	 	

	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	 	

	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	

	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	 	 	 	 	

	 	 		

normal times, while maintaining essential services.

III. Premium	Grace	Period	Principles

In response to COVID-19,	a	number of states issued bulletins directing insurers to

provide their policyholders who may be experiencing a	financial hardship due to COVID with

grace period relief to pay insurance premiums.	In response to initial state activity, which lacked

a	consistent	and coordinated approach for grace period relief, the American Council of Life

Insurance (ACLI), in conjunction with regulator feedback, developed a	set	of principles.		These

principles were designed to help offer states guidance on grace period relief and repayment

that	would ultimately promote a	more consistent	approach across states.

Recommendation

If there is a	state of emergency declared, the Subcommittee recommends that	FIO

should	support applying the following principles for insurance premium relief as originated by

the American Council of Life Insurance:

1. Allowing premium payments up to a	total of 90 days from the premium due

date so that	the policy is not	canceled or lapsed;

2. Allowing	reasonable repayment	options for unpaidpremiums;

3. Waiving any late premium payment	fees or penalties;

4. Providing reasonable flexibility to policyholders ortheir beneficiaries regarding

proof	of claim; and

5. Providing	policyholders the ability to make premium payments, report	a	claim or

otherwise communicate with the policyholders’ insurer or producer electronically,

or if in person, by maintaining safe social distancing standards

IV. Temporary Regulatory Relief that Should Be Made Permanent

As noted above, the FACI	COVID-19	subcommittee considered	temporary actions taken

that	ease commerce in a	touchless environment, that	may benefit	society if made permanent.	

Specifically, some proposed recommendations to FIO include e-delivery,	e-signature, e-filing,

and producer licensing.
	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	 	 	 	 	

E-Delivery

Recommendation

The COVID Subcommittee – Preparedness Workstream 2 supports the expanded use of

e-delivery and has reviewed potential barriers to its adoption. The	group found there are

myriad complex state and federal statutory issues—for example, affirmative consent	and

reasonable demonstration as required by the Federal E-Sign Act	and the States’ Uniform

Electronic Transactions Act	(UETA)—that	limit	the use of e-delivery, in turn restricting consumer

access to a	more consumer friendly digital experience. Although there are several research

efforts underway looking at	digital transformation for the financial services industry, none are

presently focused on the challenges facing the industry sector in relation to e-delivery.	We

believe it	is appropriate for FIO to engage various stakeholders to conduct	a	study on the

matter and develop specific recommendations that	identify areas of potential regulatory

concern	governing	e-delivery. Such a	study would be a	natural extension to FIO’s ongoing

monitoring and reporting on InsurTech issues, including e-delivery (See 2019 and 2020 FIO

Annual Reports to Congress). FIO should	conduct	a	study of Federal and State regulations

relating to the use of e-delivery in the insurance sector. The study should identify and explore

existing regulatory barriers limiting insurers’ and customers’ ability to utilize the advantages of

technological developments through the use of e-delivery, thereby enabling conduct of

business in the manner consistent	with today’s consumer expectations. The study should

summarize statutory and federal regulatory requirements relating to e-delivery for insurance

products, identify ways to improve existing laws and regulations, including areas for increased

regulatory flexibility and opportunities to harmonize any inconsistent	laws and regulations.

The FIO should solicit	input	from regulators, insurers, consumers, and other

stakeholders as part	of this study.

E-Signature

The COVID Subcommittee – Preparedness Workstream 2 would like to recommend that	

FIO encourage regulators take actions to expand the use of e-signature for insurance

transactions and regulatory filings, in line with the American Council of Life Insurers (ACLI)

“temp to perm” COVID-19 recommendations. We believe that	regulators will need to update

any references to “hard signatures” in regulatory guidance and policies as part	of this effort.

Recommendation

FIO should encourage both Federal and state regulators to permit	or, to the extent	esignature is already adopted, enhance the use of e-signature for insurance transactions and

regulatory filings where appropriate and applicable. Regulators should be encouraged to review

relevant	insurance guidance and rules that	require a	signature to expressly allow that	

requirement	to be satisfied by an e-signature.
	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	

	 	

	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 	 	

	 	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 	

E-Filing

The COVID Subcommittee – Preparedness Workstream 2 would like to recommend that	

FIO encourage regulators to adopt	e-filing protocols for insurance regulatory filings, in line with

ACLI’s own “temp to perm” COVID-19 recommendations. We are recommending that	FIO

encourage states to transition to e-filing where feasible. It’s recognized that	resource

constraints or potential statutory barriers may preclude or hinder adoption of certain e-filing

uses.

Recommendation

FIO should encourage state regulators that	have not	already done so to transition to

electronic insurance company regulatory filings where appropriate and applicable.

Producer Licensing

The COVID Subcommittee- Preparedness Workstream 2 would like to recommend that	

FIO encourage state regulators to transition to online/remote exams and training for producer

licensing. As noted in Subcommittee discussions, several states are currently working to move

training and examinations online, but	it	will take some time as there are a	limited number of

vendors available to do this work. Also, the NAIC has worked with state regulators to increase

the number of states offering remote proctored exams from one in March 2020 to 21 as of

September 2020. Additional states are exploring the possibility of remote exams in the 4th

quarter of 2020.

Recommendation

FIO should encourage state regulators that	have not	already done so to adopt	

online/remote training and examination options for producer licensing where possible.