“We are urging state regulators to allow insurers to use the best available tools to manage natural catastrophe risks,” said Eric Goldberg, AIA associate general counsel. Catastrophe modeling is the process of using computer-assisted calculations to estimate the losses that could be sustained by a portfolio of properties due to a catastrophic event such as a hurricane or earthquake.
“The use of models is very important for a stable insurance market, one that results in better portfolio management, and more accurate pricing,” added Goldberg, who will be testifying at the hearing.“ AIA believes regulatory impediments to insurers’ use of catastrophe models could result in several adverse and perhaps unintended consequences.”
The NAIC will discuss another proposal to change the collateral requirements for unlicensed reinsurers. The latest concept, the “Port of Entry” proposal, faces the same issue AIA has noted with previous proposals. “A specific problem with the current system has not been identified that would justify overhauling the current collateral system that has worked without serious problems for decades,” said Steven Bennett, AIA assistant general counsel.
“AIA supports the current collateralization system that provides reinsurers an option to either become licensed in the U.S., or post 100% collateral and not submit to U.S. licensing requirements. The collateral option is pro-competitive and promotes a healthy reinsurance market where foreign reinsurers can either become licensed or post collateral,” Bennett concluded.
Climate change and global warming will also be topics that state regulators address while gathered in the Nation’s capitol through Oct. 1. The NAIC has been considering annual statement interrogatories proposed by some advocacy groups, as new disclosure mandates.
“AIA strongly opposes the proposed interrogatories related to the annual financial statements,” said David Snyder, AIA vice president and assistant general counsel. “On the other hand, insurers are engaging in many activities that relate to climate change and global warming, and we need a constructive relationship with the NAIC and state regulators in these efforts.”