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Missouri Insurance Department NAIC Accreditation

Missouri Insurance Department Receives Highest NAIC Re-Accreditation

Missouri Insurance Department NAIC AccreditationJefferson City, Mo – The Financial Regulation Standards and Accreditation (F) Committee of the National Association of Insurance Commissioners (NAIC) voted to re-accredit the DIFP for a full five years on December 1, 2017.  This is the highest recommendation level from the NAIC’s F Committee.  This certifies the DIFP is meeting a standard that ensures all other states can rely on the department’s work and demonstrates our statutory and administrative authority to regulate an insurer’s corporate and financial affairs.

A system of effective solvency regulation provides crucial safeguards for insurance consumers, inasmuch as consumers benefit when the insurance industry is strong enough financially to be able to pay and settle claims in a timely manner.

The accreditation program also allows for inter-state cooperation and reduces regulatory redundancies.  All accredited states require financial examinations on all companies that are licensed in the state; however, in lieu of performing its own examination, a state may accept the examination report prepared by an accredited insurance department.  This keeps costs low for companies and consumers, allowing other states to rely on the work performed by our department rather than conducting their own examination and analysis. This saves millions of dollars in duplicative costs.

“Maintaining accreditation through the NAIC is one of the most important things the department can do to ensure there is a healthy and competitive insurance market in Missouri” says DIFP Director Chlora Lindley-Myers. “I congratulate my staff for their conscientious efforts in support of state regulations and their commitment to both consumers and the companies serving them. I am committed to providing a department that is accountable to our stakeholders and operates in a transparent and consistent manner that is good for our citizens and encourages insurers to locate and conduct business in our state.”

The NAIC Financial Regulation Standards and Accreditation (F) Committee also voted this weekend to accredit the departments of Alaska and Texas.  Accredited insurance departments undergo comprehensive, independent review every five years to ensure they meet financial solvency oversight standards.

About the Missouri Department of Insurance, Financial Institutions & Professional Registration

The Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) is responsible for consumer protection through the regulation of financial industries and professionals. The department’s seven divisions work to enforce state regulations both efficiently and effectively while encouraging a competitive environment for industries and professions to ensure consumers have access to quality products.

 

About the NAIC’s Accreditation Program

The NAIC Accreditation Program was established to develop and maintain standards to promote effective insurance company financial solvency regulation. The purpose of the accreditation program is for state insurance departments to meet baseline standards of solvency regulation, particularly with respect to regulation of multi-state insurers. NAIC accreditation allows non-domestic states to rely on the accredited domestic regulator to fulfill a baseline level of effective financial regulatory oversight. This creates substantial efficiencies for insurance regulators, who are then able to coordinate and rely on each other’s work. It also creates far greater efficiencies for insurance companies licensed in accredited states, which are then not subject to financial examinations or other financial oversight by multiple jurisdictions. All fifty states, the District of Columbia and Puerto Rico are currently accredited.

Overview: Accreditation is a certification given to a state insurance department once it has demonstrated it has met and continues to meet an assortment of legal, financial and organizational standards as determined by a committee of its peers. The concept of accrediting state insurance departments began in the mid-to-late 1980s when several large insurance companies became insolvent. In May 1988, as a response to the insolvencies, a congressional inquiry began looking at the insolvencies. Subsequently, in September 1988, the NAIC began discussing and shaping the Financial Regulation Standards and Accreditation Program. In June 1989, the NAIC adopted the Financial Regulation Standards and a formal certification program in June 1990.

The accreditation program relies on state certification by other regulators (i.e., peer review), requires risk-focused financial surveillance including on-site examinations, and requires solvency-related model laws, rules and guidelines that have been produced through consensus and collaboration. Accredited insurance departments are required to undergo a comprehensive review by an independent review team every five years to ensure the departments continue to meet baseline financial solvency oversight standards. These departments are also required to undergo a desk audit annually. The accreditation standards require state insurance departments to have adequate statutory and administrative authority to regulate an insurer’s corporate and financial affairs, and that they have the necessary resources to carry out that authority.

The accreditation program accomplishes its mission by continually evaluating the adequacy and appropriateness of accreditation standards in accordance with the changing regulatory environment and through continued monitoring of accredited states by conducting the following accreditation reviews:

  • Pre-Accreditation Reviews to occur approximately one year prior to a state’s full accreditation review. This review will entail a high-level review of the financial analysis and financial examination functions to identify areas of improvement.
  • Full Accreditation Review to occur once every five years subject to interim annual reviews. This review will entail a full review of laws and regulations, the financial analysis and financial examinations functions, department oversight, organizational and personnel practices, and organization, licensing and change of control of domestic insurers to assist in determining a state’s compliance with the accreditation standards.
  • Interim Annual Reviews to occur annually to maintain accredited status between full accreditation reviews. This review will entail a review of any law and regulation changes, the financial analysis and financial examination functions, and organizational and personnel practices to ensure continued compliance with the accreditation standards and to identify areas of improvement.

The accreditation program is generally updated every year with changes effective on January 1. For a listing of the changes effective in 2017 and beyond, please visit the Financial Regulation Standards and Accreditation (F) Committee webpage.

To become accredited, the state must submit to a full on-site accreditation review. During this review, the team of independent consultants reviews the department’s compliance with the standards to develop a recommendation regarding the state’s accredited status. For a state to remain accredited, an accreditation review must be performed at least once every five years with interim annual reviews. If necessary, management letter comments may be provided to the state and interim follow-up reviews may be required.

The Financial Regulation Standards and Accreditation (F) Committee, consisting of regulators from across the country, ultimately decides whether a state meets the requirements set forth in the Financial Regulation Standards. The meetings in which matters of state accreditation are discussed are held in a regulator-to-regulator session to protect the states, regulators, and in some instances, insurers from disclosure of confidential information.

 

The Colodny Fass Insurance Regulation Division handles all types of insurance-related regulation, licensing, compliance and administrative matters with state insurance departments throughout the United States.