National Association of Insurance Commissioners.
The National Association of Insurance Commissioners (NAIC) is governed by the chief insurance regulators from the 50 states, the District of Columbia, and five United States territories to coordinate regulation of multistate insurers. The NAIC develops legal, financial, and organizational standards for insurance regulators through its accreditation process.
Insurance Holding Companies.
An insurance holding company is a system that consists of two or more affiliated persons, one of which is an insurer. Every insurer authorized to do business in this state that is a member of a holding company system is required to be registered with the Office of the Insurance Commissioner (OIC), unless they are subject to substantially similar requirements where they are domiciled.
National Association of Insurance Commissioners Model Acts for Insurance Group Supervision.
The NAIC's Insurance Holding Company System Regulatory Act #440 and Insurance Holding Company System Model Regulation with Reporting Forms and Instructions #450 (Model Acts #440 and #450) provide state insurance regulators with a framework for insurance group supervision. Within the last couple of years, the NAIC adopted revisions to model acts applicable to insurance holding companies. The 2020 revisions create a Group Capital Calculation (GCC) and Liquidity Stress Test (LST) to provide United States regulators with additional tools for conducting group-wide supervision and help understand the financial condition of noninsurance entities. The GCC satisfies group capital assessment requirements of the Covered Agreements with the European Union and United Kingdom. The LST provides insights into the financial health and risks monitored by the United States Treasury, and it requires insurers to file the results of a specific year's LST to the state's insurance commissioner.
Model Act revisions made in 2020 will become an NAIC accreditation requirement effective January 1, 2026.
The 2020 revisions to the NAIC Model Acts #440 and #450 are incorporated into Washington State's Insurer Holding Company Act.
Group Capital Calculation and Liquidity Stress Test Requirements.
Every insurer authorized to do business in this state who is a member of an insurance holding company must file an annual GCC with the OIC at registration, concurrently with other necessary information, unless specifically exempt. If scoped by the NAIC's LST framework, LST results are also required at registration. The report of the GCC and LST must be completed in accordance with NAIC's instructions.
Confidentiality Relating to Information From a Group Capital Calculation and Liquidity Stress Test.
The OIC must maintain the confidentiality of the GCC, the group capital ratio produced within the GCC, the LST, and supporting disclosures and information from the insurance holding company. The GCC and resulting group capital ratio, as well as LST results and supporting disclosures, are not intended as a means for ranking insurers or insurance holding companies. Publishing, or otherwise communicating to the public, the results of the GCC or LST is prohibited, except for in instances to rebut a materially false statement.
Confidentiality Provisions in the Insurer Holding Company Act.
The OIC may share and receive confidential information with third party consultants designated by the Insurance Commissioner provided that the recipient:
In addition, documents, materials, or other information in the OIC's possession that are proprietary and contain trade secrets, in addition to being confidential and privileged, are not subject to disclosure under the Public Records Act, subject to subpoena, subject to discovery, or admissible in evidence.