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April 12, 2021

Spring 2021 Opening Session Prepared Remarks


Welcome to the 2021 Spring meeting of the National Association of Insurance Commissioners. It is an honor to welcome you this year as NAIC president. I know many of us continue to respond to the COVID-19 pandemic. And I want to thank you for your ongoing commitment to our mission of supporting state insurance regulators and ensuring that consumer protection keeps pace with our changing markets. This is our fourth virtual national meeting. And while this is no substitute for getting to meet with one another face to face, I know we will continue to make great strides towards all we are looking to accomplish this year and moving forward. The NAIC provides a framework for incredible collaboration across our fifty six states and territories and we are truly a member driven organization.

Our work streams, task forces and national meetings like this bring together a broad spectrum of viewpoints and encourage discourse crucial to supporting our state based system of insurance regulation. 2021 marks the 150th anniversary of the NAIC. Not many organizations can claim this milestone, and this longevity is a testament to the leadership provided by our membership and the dedicated NAIC employees who serve them.

On May 24th 1871, the NAIC held its first meeting. Twenty state delegates met for nine days to develop a plan for interstate insurance regulation serving the public good and building a strong foundation for the future of the insurance industry. Some of the leading underwriters of the day asserted that the founding of the NAIC and the collaboration it encouraged would probably do more to help American consumers understand the insurance market than anything the United States had yet seen. While NAIC founders assuredly did not meet via WebEx, the intent of their meeting is not so different from our meeting today. Gather regulators and stakeholders from around the country to discuss important issues and collaborate on ways to best serve the insurance consumers in their states.

Our history provides us with valuable lessons as we move forward. As the 2020 pandemic hit, we went back to our archive from the 1918 pandemic to see what regulators at the time had documented, what action they had taken to navigate unprecedented challenges, and how they protected consumers. While none of us knows what the future holds, our work today will serve as a guidepost for future generations. Our thoughts, decisions and actions will provide valuable insight for those we represent now and for those who will follow in our footsteps. Those two fundamental traits, collaboration and coordination, have served us well and allowed us to adapt and evolve our regulation and the protection of consumers to the world around us. Throughout the NAIC's history, we have seen that when tested, we have not just persevered, but we have adapted, improved and come out as a stronger system. It is a system that has been tested by two World Wars, the Great Depression, the Great Recession, two pandemics and countless other challenges. And our system remains strong and resilient. The NAIC's success lies in its member driven approach. The unique backgrounds, experiences and perspectives of our members in service to our common mission are central to the NAIC's ability to adapt to a changing marketplace. Throughout our 150 year history, we have demonstrated that we can anticipate and absorb change, shift priorities and work through numerous challenges to strengthen our collective efforts. As you look at our history, a pattern emerges. We are tested by the events of the day and we respond, coming out the other side of the challenge stronger than before. In 1968, a subcommittee was formed to establish and study the applicability of data processing techniques. The Michigan Insurance Department developed a computer program, along with Michigan State University, to assist in the auditing of annual statements. This program proved successful and was transitioned to the NAIC, allowing insurers to input data into a single location accessible to all regulators. By 1974, the NAIC was working to develop early warning systems for solvency monitoring and developed capabilities for its database. By 1978, the NAIC had established itself as a trusted source for industry data. Today, the NAIC holds one of the most robust financial data repositories in the world. The NAIC membership came together to adopt financial regulation standards and in 1990 established the accreditation program. The strength of the system resides in the interdependence of state regulators and the corresponding need for a credible and robust state based system focused on consumer protection and strong solvency oversight. I have seen these advancements firsthand. Following the financial crisis of 2008, the NAIC and state insurance regulators embarked on the Solvency Modernization Initiative, which included a review of international developments that would inform and influence the next decade of our work. The Solvency Modernization Initiative focused on enhancements to capital requirements, governance and risk management, group supervision, statutory accounting and financial reporting and reinsurance requirements, among other facets. The financial crisis, also led to a redoubling of the NAIC's coordination and outreach with federal agencies, Congress and international counterparts to ensure our actions informed and were informed by global developments. Later in 2016, as it became clear life insurance beneficiaries were too often unaware of the benefits they were owed, NAIC members developed the life insurance policy locator, helping reunite beneficiaries with more than a billion dollars in unclaimed benefits since its inception. These are important milestones, but represent only a small fraction of what we have done and what we will do through the NAIC. While it's challenging to encapsulate 150 years of accomplishments into a short speech, I would like to take a few minutes to share a short video looking at NAIC's rich history. [NAIC 150th Anniversary Video Plays]

The past has taught us we can never take our eyes off the road ahead. Our past informs our present here at the NAIC, as well as our plans for the future. So let me turn now from our past to our present and future. I am proud to lead the dedicated members of the NAIC during this historic year, and I'm pleased to share some of our upcoming celebrations around the NAIC's 150th anniversary. For the past several years, as we looked at the brands in anticipation of our one hundred and fifty anniversary, it seems like an ideal time to explore other options and improve the performance of the overall look and feel of the NAIC for our members, our consumers and our industry. Working with our membership that NAIC has developed a new logo. In thinking about what makes the unique, we understood the success of our organization is due to the commitment of our members and how they work together to serve the public good. So, we worked on creating a logo which emphasizes the commissioner's collaboration protecting consumers. I'm pleased to unveil our new logo for you now. [NAIC Logo Video Plays]

Embedded in that simple, intertwined "C" is all of our DNA from that first meeting. Our commissioners, their collaboration, the community they have created and the consumers they protect. Our logo will be rolled out starting today. In the coming weeks, you will see revisions to our website and other documents that reflect who we are. But now let's look ahead to 2021 and the actions we are taking as part of our one hundred and fifty year commitment to consumers and the insurance sector. We have some challenging work ahead of us this year. The NAIC and its members highlight its priorities annually. We determine what the priorities are during the first quarter of each year. Focus areas support the core mission of protecting consumers and safeguarding markets.

As you know, priorities can change quickly, especially with a major event like the pandemic. In 2020, the NAIC had a set of priorities in place, but quickly pivoted to focus on COVID-19. Understandably, COVID-19 continues to be a topic we are intensely focused on. The pandemic challenged us throughout 2020, and while the vaccines offer hope that there is an end in sight, there is still much work to be done as vaccines roll out to create widespread immunity, we will continue to make sure policy holders have access to affordable testing and treatment and engage with the administration, Congress and federal agencies regarding ongoing COVID-19 recovery efforts. As court challenges continue over business interruption insurance coverage, the NAIC remains steadfast in its commitment to work with Congress and offer guidance around solutions for a federal mechanism to help ensure widespread availability of business interruption insurance for pandemic risks. For a more detailed account of the extraordinary efforts made by state insurance regulators and the NAIC throughout 2020, you can access three reports chronicling our efforts at

In 2021, we will continue our focus on natural catastrophes and climate risk. We have focused on natural catastrophes for many years. The NAIC added climate risk to its charge in February 2005 at the annual commissioners' conference. The Climate Change and Global Warming Task Force met for the first time at the 2006 Summer National Meeting and began working on a white paper released in 2008 titled "The Potential Impact of Climate Change on Insurance Regulation." In 2010, the insurer Climate Risk Disclosure Survey was adopted. In 2020, we formed the Climate and Resiliency Task Force, which reports directly to the executive committee, a move signaling our increased engagement and commitment to this initiative. Task force members are considering appropriate climate disclosures within the insurance sector, evaluating financial regulatory approaches, investigating innovative insurer solutions to climate risk and resiliency, and identifying sustainability, resilience and mitigation issues related to the insurance industry. The Climate Task Force began holding weekly calls in January 2021 to gain information and perspectives around the NAIC climate risk disclosure survey and other climate disclosures. This was done with the goal of developing recommendations to address who should report, what will be reported, and how data will be collected and used in the future. The NAIC is committed to engaging, protecting, educating and advocating for our consumers in the face of the historic challenges posed by climate risk. Once again, as we have in the past, we will rise to meet this challenge.

We will also continue our work on the critical issue of race and insurance. Over the years, the NAIC has tackled several issues related to bias and discrimination in the insurance sector. The first version of the Unfair Trade Practices Act was adopted by the NAIC in 1947. The act defines and prohibits unfair discrimination for life, health, property and casualty insurance. The act also prohibits, among other things, the refusal to insure, refusal to renew, and cancelation or limitation of coverage amounts because of sex, marital status, race, religion or national origin of the individual. In 1978, the NAIC issued a report making policy recommendations to address problems facing inner city homeowners who are having trouble securing adequate insurance due to the legacy of redlining. In the 1990's, state insurance departments aggressively pursued companies using zip codes or redlining as an early form of proxy discrimination, targeting mostly urban areas. The NAIC also worked to dismantle race based premiums for life insurance. In 2000, NAIC members signed a resolution encouraging state regulators to investigate whether life insurers were charging black customers more than white customers for certain life policies. Last year, our members formed a special executive committee to continue to address issues related to race and insurance, including a commitment to diversity, equity and inclusion within the NAIC and across the insurance industry. The response from our membership was tremendous, with almost all NAIC members joining the committee. In February this year, the NAIC shared its internal diversity, equity and inclusion framework, which is built on four pillars: the workforce, the workplace, its members and the community. The NAIC's employees and leadership developed this framework collaboratively to drive change, promote accountability in the workplace and offer the insurance sector a model to build similar programs. The NAIC will continue to lead by example in the areas of DE&I. Through the NAIC, the commissioners conducted research and held public forums to foster understanding and address concerns from within the insurance industry, consumer representatives and other interested parties. Our listen and learn efforts have given us much to consider as we develop a plan of short and long term initiatives. We are currently reviewing research and commentary to evaluate steps we can take to eliminate practices or barriers which potentially disadvantage people of color or historically underrepresented groups. To have so many members and stakeholders join the discussion will only further our efforts of having a diverse, inclusive member led discussion. There are still a lot of work ahead as we strive to eliminate unfair discrimination, whether intentional or unintentional, within the insurance sector. We know this is a journey that will take continual effort, but we are up to the task.

Another focus area this year is big data and consumer data privacy. The insurance industry has always been data driven. The speed by which data is being utilized by both regulatory and insurance focused functions was hastened by the pandemic. From online applications to accelerated underwriting, the immense amount of available public data is growing. Commissioners must not only stay up to date on current technology, but regulators must also understand how emerging technology may impact insurance consumers and the sector both positively and negatively. They must also ensure consumer data is protected, as we have seen an escalation in breaches across several sectors. The implications of big data and artificial intelligence, as well as consumer privacy, protection and cybersecurity, remain important issues for us in 2021 and beyond. Last year, the membership adopted the AI principles. These principles inform and articulate general expectations for businesses, professionals and stakeholders across the insurance industry. As we implement AI tools, these principles will serve as critical guideposts for any members. We will continue to engage in appropriate and informed regulation of big data driven insurance practices. The Innovation and Technology Task Force continues to research developments related to big data and algorithmic modeling and risk management practices, with the goal of releasing a report at the fall National Meeting, Technological Advancements, AI and consumer data privacy protections cut across a wide range of activities and work groups. Our members will continue to engage with each other, state attorneys general, Congress and federal and international agencies to share best practices and insights around the implementation of emerging technology while protecting the privacy and rights of the public we serve. State insurance regulators interact with their federal counterparts on a regular basis on cybersecurity matters. Director Farmer represents the NAIC on the Financial and Banking Information Infrastructure Committee, which is charged with coordinating efforts to improve the security and reliability of the infrastructure for financial markets. The NAIC participates in FBICI calls with Treasury, Federal and state financial regulators and the Cybersecurity and Infrastructure Security Agency to share information around cyber activity. In addition to cyber information sharing, Treasury, state insurance regulators and the NAIC have collaborated to facilitate several tabletop exercises with insurers to explore cyber incidents, response and recovery. These exercises help regulators and the insurance industry test their ability to respond effectively to potential incidents. The NAIC is committed to continuing to coordinate future exercises with additional state insurance departments, industry and federal and state law enforcement officials.

Long term care insurance also remains a focus. State insurance regulators have been grappling with the issue of long term care insurance for many years. This includes issues surrounding a shrinking market, the threat of current and future insolvencies, and the impact of large rate increases on our most vulnerable residents. As part of the initiatives around Long Term Care, the Long Term Care Insurance Task Force was formed last year with commissioner level involvement to help determine the path forward. As a result of the hard work of the members in these groups. We have seen tangible progress towards the goals of the task force, including improved analysis of companies reserves, a pilot program for a uniform and efficient multi-state rate review process, and a principles document regarding reduced benefit options. We will continue ongoing efforts to improve the consistency around Long Term Care rate review processes and remain focused on the consumer. We want to ensure that consumers are able to understand these increases and the available mitigation options, so that they can choose the option that best aligns with their needs while maintaining affordability.

In addition to advancing our policy priorities, our members are overseeing the implementation of state ahead and the development of our state ahead 2.0 plan. State Ahead is NAIC's the strategic blueprint for the future of our state system. Some highlights of this initiative include enhanced tools for state insurance departments, improved actuarial modeling resources, enhanced financial analysis tools, improved data modeling capabilities and updated consumer resources. The goal of State Ahead remains to provide our members with the tools, talent and technology they need to ensure the US's ongoing preeminence as the largest single insurance market. Later this year, NAIC members will get together and build the strategy for State Ahead 2.0.

And like most things at the NAIC, we are not building this just for ourselves, but for the generations of regulators to come. As we imagine the future of insurance, I am sure that the NAIC will be at the forefront of progress and continue its legacy for years to come. The insurance market of one hundred and fifty years ago doesn't look much like the market of today. But as we always have, we will continue to adapt and forecast what the insurance sector may look like five, twenty five, fifty or another one hundred and fifty years from now. Today's priorities may be COVID-19, natural catastrophe and climate, race and insurance, AI, Big Data, consumer data, privacy protection and Long Term Care. But rest assured, while we have an eye on the issues of today, the members of the NAIC are constantly scanning forward to see what may be in the future to ensure this rich 150 year legacy will continue for another 150 years. We will, as we have been from the very beginning, be guided by our commitment to each other and the consumers we protect.

I want to thank those of you participating in this virtual Spring National Meeting. This is an important avenue for supporting our unique state based system of insurance. I believe that as regulators, we make our best decisions when we consider as many different perspectives on issues as we can, so that the decisions we ultimately make are as informed as they can possibly be. This is a member driven effort and communication with one another and open discussions with stakeholders are vital to our consumer protection efforts. There are a number of important sessions in the days ahead, and I encourage you to engage as much as possible. At the end of the day, we can make consumer driven and data driven decisions that promote solid and stable markets for consumers to rely on. I look forward to working and connecting with each of you.

My door is always open and with that I officially conclude this opening session of the two hundred and thirty first meeting of the National Association of Insurance Commissioners.



About the National Association of Insurance Commissioners

As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.