Sunday, February 08, 2009
Insurance company financial strength requirements: may vary among states, may complicate things for consumers
Insurance companies, especially in the life insurance industry but probably also in casualty, have been lobbying their home state governments for “relief” from some accounting standards rules. This is happening after NAIC rejected their request for accounting changes. Policyholders, same consumer advocates, could be exposed to the whims of politics in their home states
The Washington Post story appears on the Business Section this morning “Regulators Reconsidering Insurer Relief: Rules for Companies Could Vary From State to State”, by David S. Hilzenrath, link here.
The story mentions the Consumer Federation of America (CFA), whose last press release on the NAIC issue was in Dec. 2008, here.
The Center for Economic Justice (CEJ) has a page on the insurance regulation and insurer financial standards issue here.
There would be a concern that tight standards of financial strength would cause insurers to become pickier about accepting customers, or to tighten underwriting standards to reduce the risk of anti-selection or of hard-to-estimate risks, as well as to walk away from insuring properties in disaster prone areas. The possibility of losses to crime might become a more sensitive issue in this economy and out-of-control crime exposure in some areas.
Update: March 2, 2009
Leslie Scism has an important Wall Street Journal analysis today "Annuity Math Anxiety: Consumers wonder if they are exposed to more risk as some insurers get regulatory relief in calculating their reserves", link here.