In recent years, there has been significant discussion on group supervision. The collective state insurance departments (through the NAIC) have been further developing their lead state concept and have incorporated aspects of this concept into state insurance law. Specifically, the NAIC Insurance Holding Company System Regulatory Act (#440) and the Risk Management and Own Risk and Solvency Assessment (RMORSA) Model Act (#550) refer to filing certain reports with the lead state commissioner. The Lead State is generally considered to be the one state that “takes the lead” with respect to conducting group-wide supervision within the U.S. solvency system. The concept of Lead State is not intended to relinquish the authority of any state, nor is it intended to increase any state’s statutory authority or to put any state at a disadvantage. It is intended to facilitate efficiencies when one state coordinates the regulatory processes of all states involved.
A decision of a Lead State encompasses input from all domestic state insurance regulators of the group where a majority of such domestic states must agree to the decision.. The determination of a Lead State is impacted by the following factors:
- The state with the largest market share by direct premiums written
- Domiciliary state/country of top-tiered insurance company in an insurance holding company system
- Physical location of the main corporate offices or largest operational offices of the group
- Knowledge in distinct areas of various business attributes and structures
- Affiliated arrangements or reinsurance agreements
In order to assist with identifying the lead state for all groups that hold more than one U.S. insurer, the Lead State report is available for use in submitting the Enterprise Risk Report (Form F).