DALLAS - With a December deadline inching closer, state insurance regulators rolled up their sleeves here this week to rework their plan to forestall a national charter.
In the wake of the Gramm-Leach-Bliley Act of 1999, the National Association of Insurance Commissioners is designing the model charter to ease the compliance burden for insurance companies and banks in the insurance business that operate in multiple states.
At their quarterly meeting here, the insurance commissioners said that by December all 50 states will be using a uniform application for companies that want to be regulated under the national standards.
Under the proposal, a company would have to meet a minimum size standard and risk-based capital ratio to be eligible to use the national system. Among other things, the insurer would have to hold a "BBB-" or higher rating from a private ratings agency such as Moody's Investors Service or A.M. Best, and submit a business plan that includes financial projections for two years.
Banking affiliates of the company seeking status under the national standard would have to be in good standing with their regulators by meeting Gramm-Leach-Bliley's "well managed" and "well capitalized" criteria.
Once a company is recognized in the national system, its applications for licenses or for acquisitions would be reviewed just once and decisions would be binding in all states. The NAIC expects the new system to save companies time and money.
It plans to implement the system as a pilot program between June 2001 and June 2002, and expects to formalize the national standards by June 2003.
The group has scheduled a November meeting to solicit comments on the proposal. It expects to finalize the system at a meeting in Boston in December.