FEDERAL ADVISORY COMMITTEE ON INSURANCE

MEETING MINUTES

WEDNESDAY, MARCH 13, 2013

The meeting convened in Media Room A/B at the U.S. Department of the Treasury, 1500 

Pennsylvania Avenue, NW, Washington, D.C., at 9:00 a.m., Brian Duperreault, Chair, presiding.

MEMBERS PRESENT:

BRIAN DUPERREAULT, Chair

MICHAEL McRAITH, Committee Decision Maker and Director of the Federal Insurance Office

DAVID BIRNBAUM, Member

MICHAEL CONSEDINE, Member

*JACQUELINE CUNNINGHAM, Member

JOHN DEGNAN, Member

ROBERT EASTON, (Representing

BENJAMIN LAWSKY, Member)

LORETTA FULLER, Member

SCOTT E. HARRINGTON, Member

*SCOTT KIPPER, Member

THOMAS LEONARDI, Member

MONICA LINDEEN, Member

CHRISTOPHER MANSFIELD, Member

SEAN McGOVERN, Member

MICHAEL E. SPROULE, Member

WILLIAM WHITE, Member

ALSO PRESENT:

JAMES P. BROWN, Designated Federal Officer

EDWARD CONNOR, Deputy Associate Administrator for Federal Insurance, Department of 

Homeland Security

DUNCAN ELLIS, Marsh & McLennan Companies

LINDY GUSTAFSON, Federal Insurance Office

ROBERT W. O'BRIEN, Marsh & McLennan Companies

ELIZABETH SAMMIS, Federal Insurance Office

*Participated via teleconference
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At 9:08 am, Chairman Duperreault called the meeting to order. He asked for approval of 

the Minutes from the November 14, 2012, Meeting. The Minutes were approved by a show of 

hands. The Chairman recognized Commissioners Cunningham and Kipper who called in to 

participate in the meeting. He noted that Member Mansfield has retired from Liberty Mutual but 

is staying on the Committee.

After outlining the diversity of insurance experience represented by members of the 

Committee, the Chairman opened discussion of the first item on the agenda which was Super 

Storm Sandy. He called on Ed Connor to update the Committee on the efforts of the National 

Flood Insurance Program (NFIP) to respond to the aftermath of the storm.

Mr. Connor stated that his organization spent a substantial amount of time dealing with 

complaints from insureds on topics such as claims payments not being what they should be and 

adjusters not responding quickly enough.

He stated that NFIP’s highest priority is to make sure that claimants are paid and that 

they're paid expeditiously. Back in January, Congress approved the increase in the borrowing 

authority by $9.7 billion for the fund that went into the National Flood Insurance Fund. Those 

funds were allocated for paying claims and expenses. At that point, the projections were 

somewhere from $6 to $7 billion in losses for Sandy, Write-Your-Own companies can draw on 

those funds to pay claims and they should be doing so.

With respect to the adjusters, they are incentivized to close the claims as opposed to delay 

them because they don't get paid until the claims are completed. The NFIP is making an effort to 
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get a better understanding of where there are hold-ups in the very processes, document these 

problems and learn from them.

Chairman Duperreault thanked Mr. Connor for his comments and then opened the floor 

to questions from the committee.

Director McRaith asked about the licensing of adjusters and any problems associated 

with multiple companies using the same adjuster.

Mr. Connor stated that adjusters have to be licensed and certified as understanding the 

flood program’s rules.

Director McRaith noted the large number of claims and asked Mr. Easton about New 

York’s experience in attaining a sufficient number of adjusters.

Mr. Easton said after his state had the flooding and hurricanes upstate in 2011, regulators 

reached out to FEMA to do additional flood adjusting certification in New York. That happened 

in July. There were insufficient numbers of certified flood adjusters to handle the volume of 

complaints that were coming out of the upstate claims prior to Sandy. Even with that additional 

training, the numbers of adjusters was still inadequate. By using a New York statute which 

allowed for temporary licensing of adjusters, 20,000 emergency adjusters were added to the 

permanent contingent of 12,000. 

There were complaints about a lack of coordination between adjusters. Some people 

would have their homeowners adjuster come out but would be waiting for the flood adjuster, so 

there were problems; but in terms of the numbers of boots on the ground in New York, it appears 

to have been sufficient.

Director McRaith asked commissioners from other affected states to comment on their 

experience regarding Sandy in general, and adjusters in particular.
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Commissioner Leonardi commented on Connecticut’s efforts which included the 

extension of licensing of a substantial number of temporary adjusters who were already in the 

state.

Member Fuller brought up the issue of independent adjusters.

Mr. Connor suggested that some of the delay in settling claims can be attributed to 

differences between what an independent adjuster sets the damage at and what the company 

adjuster recommends.

Chairman Duperreault recognized Member Birnbaum for comments.

Member Birnbaum offered his opinion that it is helpful to think about how many of the 

problems cited flow out of the fact that flood is a separate policy and not an included peril in the 

homeowner’s policy.

Mr. Connor agreed with Mr. Birnbaum’s comment. He outlined past efforts to return the 

flood program to the private sector which have yet to be successful. Resolving a claims issue is 

a lot more seamless if it's done through the private sector. They've got the mechanisms to do it. 

Member Degnan noted that Congress appropriated $9 billion. FEMA has paid $5.8 

billion and is estimating maybe $7 to $8 billion in payments. If you extrapolated that amount

into premiums that would have to be charged privately for flood insurance it's an uneconomic 

proposition. There is a role for the government here as a matter of public policy. Flood 

insurance would be unaffordable to most people if it were priced properly on a private basis.

Member Birnbaum acknowledged that Mr. Degnan had made a good point but offered a 

couple of responses. The first was why you would want the government to be involved in a 

subsidy that isn't explicit. If you're going to have a subsidy, say that people can't afford the 

insurance to maintain their property, then why don't you have that as an explicit subsidy as 
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opposed to a hidden subsidy through subsidized insurance rates? The other part of it is it seems 

to me that there are a lot of efficiencies that would come from having a multi-peril policy. The 

most important thing for consumers is having a product that actually provides the essential 

financial security tool that consumers are looking for. Paying money for a product that doesn't 

really provide that security is a real drawback.

Director McRaith asked Mr. Connor to comment on the study that was authorized by the 

Biggert-Waters law.

Mr. Connor stated that the law calls for the NFIP to do 16 separate studies. The major 

one concerns affordability in an environment where subsidies are to be eliminated by terms of 

the Biggert-Waters legislation.

Director McRaith added that the law calls for the FIO to perform a study on the natural 

catastrophe insurance market and related issues. That report is due in July.

In response to a question of Chairman Duperreault, Mr. Connor stated that Sandy had 

caused a delay in the start of the studies but that they were a high priority. He also indicated that 

the new rate schedule was implemented in January which eliminated subsidies for non-primary 

residences. Severe repetitive loss properties are going to be subject to a 25 percent rate increase 

annually until you get to the full rate. So it's not happening all in one chunk. It's going to be 

done in stages. The first starts January 1.

Member Fuller asked how this information regarding rate increases will be disseminated.

Mr. Connor enumerated a number of distribution channels including the Write Your Own 

companies.

Chairman Duperreault thanked Mr. Connor. He then introduced Bob O’Brien and 

Duncan Ellis from Marsh & McLennan to discuss the private sector’s perspective on Sandy.
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Mr. O’Brien stated that Sandy presented some unique factors including that it hit one of 

the most densely populated parts of the country. And also, a lot of the people who are 

responding on the commercial insurance side were personally affected by it. He went on to say 

that there's no such thing as a local catastrophe anymore. Every catastrophe has a global impact.

In a storm like Sandy, coverage questions have to be addressed on a policy by policy 

basis. Also, it's important with businesses to get the cash back to these companies as quickly as 

possible. So setting up a process very early on with the insurance markets for prompt cash 

advances is critical.

Mr. O’Brien asked Mr. Ellis to comment on market impact.

Mr. Ellis indicated that there had been a fairly positive rate environment from a consumer 

standpoint prior to Superstorm Sandy. Rates were starting to move downward after about 18 

months of a steady upward trend. Unfortunately, Superstorm Sandy put an end to that. But what 

Superstorm Sandy really did was tighten up the wording. There's a tremendous amount of 

attention right now on the wording in the contracts themselves that the underwriters have been 

issuing. Precisely defining terms such as storm surge and named storms is undergoing a major 

push by insurers.

An additional factor affecting the market is the NFIP flood zone maps since location in a 

flood zone is a critical rating factor. The calculation of deductibles is also being rethought. 

There are also issues regarding supply chain interruption that have been highlighted by 

Superstorm Sandy.

Director McRaith asked about insureds’ interest in mitigation efforts.

Mr. O’Brien suggested that there always is a focus after these events on whether a 

company’s business recovery plan or loss control or loss prevention plan have flaws.
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Mr. Ellis indicated that there is a renewed interest in business continuity planning as well 

as a concerted effort to get valuation of property right.

Mr. O’Brien opined that the business interruption component can also be very 

challenging.

Director McRaith asked that Mr. Ellis elaborate on the problem of supply chain 

interruption.

Mr. Ellis indicated that the peril which is causing the damage to a non-owned supplier or 

a non-owner receiver of your product has to be a peril covered by the insured’s policy itself. 

What we're finding now is the underwriters are saying we will cover your direct suppliers and 

that's it.

Many of these contingent time element coverages traditionally were throw-ins and 

certainly weren’t underwritten to the same degree that traditional fire coverage is e.g. ingress, 

egress, civil and military authority. These additional coverages are starting to add massive costs 

to the settlement. So what we see around the contingent time element and some additional 

coverage is that the underwriters are now starting to pay a lot more attention to them and also 

price accordingly which they hadn't in the past.

Mr. Easton offered that both in the personal and commercial line space the role of the 

broker-agent is vital, not only after the peril has occurred but up front and particularly educating 

consumers about what they're buying beforehand. 

Member Fuller inquired about the differences between personal and commercial policies 

regarding coverage below ground level.

Mr. Ellis responded by saying that they're categorically different. Commercial flood 

insurance under a traditional commercial insurance policy will not have the limitation about 
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property being stored below grade. It is a replacement cost policy so it will give you like-kind 

and like-quality to replace that product or that property which is damaged.

Commissioner White then posed the question as to who should take the lead on 

reconciling differences like replacement cost versus actual cost value. There are a whole set of 

policy provisions that are based on underwriting criteria that obviously are going to change as a 

result of some of the experiences we've had recently, especially the frequency of more severe 

types of losses. And obviously for the consumer it becomes a concern in terms of well, what am 

I actually buying.

Chairman Duperreault thanked Messer’s O’Brien and Ellis for their presentation and 

urged them to work with the NFIP on their studies. He then asked if there were any additional 

comments regarding Superstorm Sandy.

Member Degnan raised the question of regulator arbitrage. Stating that it had not 

happened in Sandy, he warned of the dangers of regulators imposing unrealistic timeframes on 

adjusters in the aftermath of a catastrophe.

Commissioner Leonardi responded by describing the work done by the NAIC’s Northeast 

Zone membership to better coordinate post storm efforts and so avoid the problem cited by Mr. 

Degnan. The Commissioner went on to talk about his state’s outreach program designed to 

educate insureds on hurricane deductibles, coverage issues and the like.

Mr. Easton acknowledged Member Degnan’s point but expressed his view that 

companies needed to respond to claims within reasonable time periods.

Director McRaith asked members about the damage caused to automobiles by the storm 

and whether any particular issues had surfaced in regard to auto insurance.
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Member Mansfield commented that the number of cars receiving damage from Sandy 

was stunning.

Mr. Easton said there were about 100,000 auto claims. Almost all of them have been 

resolved. Insurers have paid more than $1.3 billion. And almost all of them were total losses 

because once salt water goes through a car, its game over.

Member McGovern reacted to the discussion of Superstorm Sandy by suggesting that this 

committee should consider taking a role in trying to signal or give some view on how we can 

deliver a better service to the consumer in events like this.

Director McRaith expressed his support for that type of an effort.

Member Degnan suggested that we shouldn't lose sight of the fact that this is a 

competitive industry. Every large claim scenario is an opportunity for every company that cares 

about its relationship with its customers to demonstrate that it will deliver exemplary.

Chairman Duperreault brought this discussion to a close by citing Member Birnbaum’s 

point that we have a federal program and a private approach that leads to gaps in understanding 

which can become issues after events such as these. He suggested that the NFIP studies look 

into how to better coordinate programs if the federal flood program stays in existence. He then 

introduced the next topic which was the Federal Insurance Office’s mandate to look at 

affordability and accessibility of non-health insurance products to the traditionally underserved 

communities. He then called on Beth Sammis and Lindy Gustafson of the FIO to lead the 

discussion.

Ms. Sammis started by quoting the statutory language regarding the FIO’s mandate. She 

then stated that there had been meetings with about 27 groups that include industry 

representatives, trade organizations, academics, consumer advocacy groups and other groups 
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within the federal government concerning the topic. In addition, staff has reviewed the literature 

on the topic. It is clear from those meetings and that review that the consumer groups and 

industry have very different views about how best to promote access to affordable insurance 

products. Consumers obviously believe that the solutions rest in regulation and the industry in 

market competition. She added that all of the groups that were consulted identified the same 5 

issues: data, transparency, the type of state regulation, risk clarification and demographic 

changes in the country.

The most glaring thing resulting from the review and discussions is really how little 

seems to be known either at an academic level or really in a concrete way what consumers are 

actually experiencing day to day as they try to buy insurance or to understand their policies 

except when they have a claim during a catastrophic event.

Ms. Sammis asked the Committee to assist the FIO efforts by considering the following 5 

basic questions:

1. Should we define underserved communities and if so how?

2. Should we define access and affordability and if so how?

3. What insurance products should be monitored?

4. What issues should FIO consider to help move beyond the past debates?

5. What activities should FIO engage in to monitor access to affordable insurance?

With that Ms. Sammis concluded her remarks.

Chairman Duperreault asked if the Committee had any questions or comments.

Member Birnbaum stated that for consumer organizations the top priority is for either 

state insurance regulators or in the absence of state insurance regulators doing it, FIO collecting

meaningful data to do a meaningful analysis of availability and affordability. He stated that 
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there's a really stark contrast in the type of data that's available for home lending and other types 

of lending through the Home Mortgage Disclosure Act than what is available in insurance 

matters. Basically the academics, fair housing advocates can get information on pretty much 

every mortgage application and the characteristics of the applicant and the resolution of that. 

And the types of research that have been done with that have informed a lot of public policy. He 

stated that there's simply no similar data available for personal lines insurance. He continued by 

saying, collecting data is really the key because unless you have some objective information then 

everything else is just subjective ideas about what availability and affordability is.

He suggested that in his experience, state regulators have little interest in collecting such data 

and that it seems to be not just an opportunity but a requirement for FIO in the absence of state 

insurance regulators looking at this to start collecting data.

Member Birnbaum also outlined his thoughts on the Department of Housing and Urban 

Development’s rule on disparate impact.

Chairman Duperreault asked for comments.

Director McRaith said that the FIO approaches its mandate informed but not predisposed to any 

particular course of action. The one clear objective is to not repeat the discussions and 

arguments that have been almost passed down through the ages. Our goal is to shed light on 

these important questions in a way that is meaningful and responsible.

Member Harrington noted that something that's not on the list of five items would be 

providing more information about the underlying cost drivers and other economic factors that 

give rise to affordability and access issues. 

Ms. Sammis agreed that it would be useful to look into those factors.
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Chairman Duperreault asked if any of the regulators had comments on Mr. Birnbaum’s 

statements regarding data collection efforts by the states.

Commissioner Lindeen commented that state regulators do want to be informed on these 

matters as much as possible within the limitation of available resources.

Commissioner White stated his belief that the data is available from what the states 

already collect and that the problem is agreeing on what to extract rather than whether the 

information is available.

Ms. Sammis cited the Missouri Department of Insurance as an example of what can be 

done. She indicated that the work of the staff statistician had produced valuable information on 

any number of insurance topics.

Chairman Duperreault thanked Ms. Sammis and Ms. Gustafson for their report and 

indicated that the subcommittee on Affordability and Accessibility of Insurance would take up 

the questions in their next session. He then introduced the next question for discussion which 

was captives and special purpose vehicles looking at reinsurance, particularly on the life side. He 

called on Member White to lead the discussion.

Member White started by noting that over the past 10 to 15 years, the issues around the 

use of captives has become much more focused in terms of concerns about how to count or how 

to look at the reserving as it affects solvency especially on the life side. He added that the most 

recent statistics show that nearly 25 to 35 percent of the entire commercial market utilizes 

captives making it the largest part of the Alternative Risk Transfer (ART) market. The NAIC has 

been focusing on the use of captives as special purpose vehicles for managing excess reserves or 

what are considered to be excess reserves for losses with life insurance companies. The concern 

is whether these reserves that have either been transferred and/or financed using captives are 
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properly disclosed and accounted for in their parent company’s financial statements. This has 

important ramifications as work continues on developing solvency criteria at the NAIC as well as 

in the on-going international initiatives. Commissioner White stated that the NAIC had 

established a special committee to study the reserve redundancy matter.

Member Sproule thanked Commissioner White for his report and efforts on the issue. He 

added that he supported Commissioner White’s recommendations for the inclusion of captives as 

part of the NAIC accreditation program and the requirement for unconditional evergreen letters

of credit to support reserves. This recognizes that conditional letters of credit or parental 

guarantees are really not consistent with securing NAIC credit for reinsurance. He also 

recognized his recommendation for a requirement for quarterly statutory accounting filings for 

captive insurance companies. Enhanced disclosure and transparency in this area is particularly I 

think critical.

Mr. Sproule continued by saying that Commissioner White also noted the international 

aspects of this issue in that the IAIS has clearly indicated that captives really need to be regulated 

as life insurance companies. He added captive structures are one of the many steps that a 

number of companies have taken in an effort to artificially boost these risk-based capital ratios 

that they publish. Strong solvency requirements are fundamental to the long-term viability of the 

life insurance industry.

Member Harrington asked to what extent are the rating agencies paying close attention to 

these aggregates and considering the security or lack thereof in these aggregates when assigning 

ratings to the underlying insurance companies?

Member Sproule responded by saying sometimes the conclusions that come out of the 

rating agencies are a mystery. He added that this is a bigger problem than it might seem because 
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as the Federal Reserve starts to get into the area through SIFIs or potentially extensions beyond 

that of starting to regulate and look at the financial strength of life insurance companies through 

bank standards rather than insurance concepts is worrying to the life insurance industry.

Member White responded to Member Harrington’s question by saying that the rating 

agencies are in a bit of a quandary. So the reviews seem to be on a company by company basis 

and he quoted an old saying that when you've seen one captive you've seen one. So you are 

going to see differences in how these are handled from a rating agency standpoint based on the 

individual company and the individual deal.

Chairman Duperreault referenced the fact that New York, Connecticut and Pennsylvania 

have substantial numbers of life insurance companies domiciled in their states. He asked for 

comments from representatives of those areas.

Mr. Easton commented that the structures alluded to by Member White raised real 

questions about the genuineness of risk transfer within the holding company systems that are 

involved. He said that the disclosure around those kinds of guarantees, for instance, is very

spotty. Sometimes it's in annual statements, sometimes it's not. He pointed out that the second 

related issue is because these are being framed as reinsurance transactions, they raise all sorts of 

questions as to what really constitutes reinsurance and because you don't have a uniformity of 

approach among the several states -- it creates a system where the ability to oversee what’s going 

on in a holistic way is compromised.

Mr. Easton’s final comment referenced the problem of redundant reserves and how they 

would be accounted for in a principle based reserve (PBR) system. He added that there are 

indications that even under a PBR approach, companies want to continue the use of captives and 

ART mechanisms.
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Member Leonardi pointed out that Joe Torti, the superintendent from Rhode Island, is the 

chair of the NAIC (E) Committee, Financial Regulation Committee. Under Torti’s leadership, 

the Captives and Special Purpose Vehicles Working Group has produced a white paper that has 

been out for comment. He continued that the revised version basically taking all of those 

comments as being re-published and posted and will be open for comments for 45 days more.

Commissioner Consedine stated that from a leadership perspective this is something that 

the NAIC is very focused on because it goes right to the heart of our responsibility as financial 

regulators. The two areas of significance are transparency and on the risk transfer accounting 

side whether there are any legitimate uses of these SPVs.

Member Degnan re-raised the question of rating agencies and their role in the industry. 

He suggested that this could be an area of interest for the Committee to look into.

Chairman Duperreault commented that Mr. Degnan’s suggestion had merit. He then 

asked Member White if the NAIC task force is looking at just this issue of SPVs only in life, or 

are they looking at captives in general? He opined that one of the risks is always there others get 

swept up in regulations that are inappropriate for the level of activity that other captives are 

doing.

Commissioner White responded that the task force was looking at captives in general, not just in 

the life area. Although the primary focus has been on the life side, there are areas in the property 

and casualty use of captives that need to be looked into as well.

Member Mansfield asked what the expected end result of this activity was and how are 

the FIO and state regulation involved?

Member Leonardi pointed out that the discussion at the Committee had been robust but 

members were not operating as regulators in the context of the meeting. Rather the role of the 
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members had been to present information and opinions. He stated that the bottom line is that 

there is recognition that transparency, uniformity and the credibility of the solvency structure are

what are most important.

Member White added that he always regarded his role as a regulator as making sure that 

the companies that he regulates is solvent. They must be able to meet the obligations and keep 

the promises that they've made to their policyholders. 

Member Sproule added that none of the conversation is to suggest that all captives are 

bad, it's a case of looking to make sure that there is a legitimate risk transfer that's taken place 

and there are admissible assets that are there to back up those reserves.

Chairman Duperreault raised the question of whether the Committee ought to have a task 

force to look into the area.

Member Leonardi disagreed with the idea of creating a new subcommittee within the 

FACI to study the issue.

Director McRaith indicated that he believed a FACI task force would be appropriate for 

this matter. He asked member White to head up the effort and to serve as a conduit between the 

Committee and Superintendent Torti’s group.

The Director pointed out that in this matter there were the usual perspectives of industry 

and states. In this case, however, there are differences of opinion between the states. He added 

that the issues discussed are important. The Committee’s involvement is not in the interest of 

duplicating effort but in the interest of the Treasury Department of the United States being fully 

informed about this important risk transfer or not risk transfer mechanism employed by the life 

industry in particular.
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Member Sproule supported the idea of going forward with the task force and endorsed 

Commissioner White to head it.

Mr. Sproule went on to say that industry is very competitive and the whole process of 

securing permitted practices that give companies some variance from what are the standards 

affecting their solvency needs to be scrutinized, the captives are a piece of that.

Director McRaith recognized the valuable work being done by the NAIC and expressed 

his view that getting some focused information from a Committee task force was worthwhile.

Member Birnbaum asked whether there were international implications to the issues.

Director McRaith confirmed that there are. He indicated that the initial focus of the 

group should be foundational research with discussion of international implications to come 

later.

Chairman Duperreault asked Member White to lead the task force. He agreed to. The 

Chairman then asked Member Birnbaum to assume chairmanship of the Affordability and 

Accessibility of Insurance subcommittee. Mr. Birnbaum agreed to do so.

The meeting then turned to a report from Director McRaith on international work 

streams. He indicated that he would be commenting on 3 separate items.

The first was the IAIS efforts on the designation of globally systemically important 

insurers. That process is moving forward in a way that's reflective of the collective will of the 

working group which is to arrive at reasonable appropriate conclusions with respect to the 

designations. The contributions of the state regulators have been important in these discussions.

He stated his belief that there will be a reasonable conclusion this year at an appropriate time for 

the international process. And that conclusion, whatever it is, is something that we will build on 

and improve in coming months and years.
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The Director continued by citing that the IAIS is developing a common framework for 

the supervision of internationally active insurance groups. That work is ongoing. He stated his 

belief that it's of increasing importance for the United States to be engaged in and leading this 

discussion as the emerging economies are looking for international standards that they can apply 

to or implement in their domestic regimes. ComFrame provides an opportunity for international 

standards that are consistent with the views in the United States.

Member Degnan asked the Director to comment on the capital standard versus capital 

requirement issue that is on the minds of both companies and probably regulators.

Director McRaith responded by saying that there will be some formal communication on 

the objectives of ComFrame released in the near future and that will be an explicit statement 

from the IAIS about the objectives of ComFrame. And it'll clarify a lot of the tremendous

amount of misinformation and mythology that's developed around ComFrame. Specifically, 

ComFrame is not intended to develop a global capital standard for the international firms. 

Member Birnbaum inquired about market conduct activities of the IAIS committee.

Director McRaith responded that to date that committee has not been a focus of energy 

but that U.S. regulators and he have pressed for more action from the group. 

The Director then reported on Solvency II. The six members of the steering committee 

agreed on a consensus document that announced the way forward for the EU and the U.S. 

insurance supervisors. And the stated objectives and the steps that will be taken to meet those 

objectives are in the direction of improved compatibility between the regimes, improved 

convergence if and where appropriate. And most importantly, it's a commitment in both 

jurisdictions to work together. He did not speculate on Solvency II as a political matter in the 

European Parliament or with the European Commission.
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Member McGovern commented that progress was slow and the earliest it would be 

implemented would be January 2016. Citing his own company’s investment in the adoption of 

Solvency II, he indicated that the U.K. regulator has allowed Lloyds and other groups which are 

ready to implement it to proceed. He stated that to some degree the permission of divergent 

standards is contrary to the harmonized approach it was supposed to bring. He concluded by 

saying that the timetable is somewhat uncertain but progress is still being made. And Lloyd’s 

sense particularly on the property casualty side of the industry is still a very significant 

commitment to the project. The challenges on the life side are substantial and the main reason for 

the delays.

Member Consedine commented that in his view the U.S.-EU dialogue is now going in a 

much more favorable direction since we're working together much more collaboratively to 

understand each other's systems.

The Chairman asked for and received the dates for the next meetings which will be June 

12, September 18 and December 11.

As part of new business, Director McRaith noted the hiring by the NAIC of former U.S. 

Senator Ben Nelson as CEO. The Director cited Senator Nelson’s experience as Nebraska 

Insurance Commissioner, Nebraska Governor and his 2-terms in the U.S. Senate. 

Chairman Duperreault suggested possible topics for the next meeting including the 

Terrorism Risk Insurance Program and rating agencies. He asked for additional suggestions.

Member Birnbaum brought up the matter of credit-related insurance. He suggested that 

the topic has become timelier because of recent rules by the Consumer Financial Protection 

Bureau that impact lender-placed insurance.

Chairman then adjourned the meeting.