A panel drafting an Insurance Receivership Model Act (IRMA) for state legislatures will hold a critical conference call tomorrow to decide how fast they move on the controversial measure, a regulator said.
The telephone session to review objections raised by the insurance industry and insurance regulators will be held by the Financial Conditions E Committee of the National Association of Insurance Commissioners.
Members of the committee at first seemed eager to swiftly approve the legislation, but the group encountered considerable opposition from the insurance industry, which argues the model fails to protect policyholder interests.
Virginia Insurance Commissioner Al Gross, the committee chairman, said the panel will consider all objections from both industry and regulators during tomorrow's conference call.
Mr. Gross said the outcome of the conference call will decide whether the measure gets action at the NAIC's fall quarterly meeting Sept. 10-13 in New Orleans. Whether "we take any action on it in New Orleans will depends on what happens on Wednesday," he said.
Mike Koziol, assistant vice president of the Property Casualty Insurers Association of America (PCI), Des Plaines, Ill., said the current model strongly favors liquidators over policyholders and other parties in liquidations.
Among the major concerns of the industry, he said, are large deductible provisions and reinsurance recoverables.
Mr. Koziol said that as commercial policyholders have become a more important factor in liquidations the large deductible issue, which is in a sense self-insurance for deductible layer, has become more important. "Guaranty funds should not cover self-insurance," he said.
Mr. Koziol also expressed concern about the large grants of immunity to receivers and their contractors. "For example, IRMA would prevent a claimant from suing the contractor who released personal information. That is going too far."
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