Q: What's the Problem? What's the Goal?

Observation #1: We should be clear on the problem we are trying to solve.

Which raises the question:

  • What is that missing piece?
  • What is the problem we are trying to solve?
  • We must know the problem if we are to assess whether the solution works or whether, as is also possible, it only makes the situation worse.

2011 0328 - Comments to the NAIC Solvency Modernization Initiative (SMI) Task Force, Therese M. Vaughan, CEO, NAIC - 11p

  • Kanjorski - What is the plan, and what is the problem? - <Paraphrasing a Staffer) - (p14)

2009 0210 - GOV (House) - Extraordinary Efforts by the Federal Reserve Bank to Provide Liquidity in Current Financial Crisis - [PDF-123p

  • Leonardi (CT- Insurance Commissioner):  So I think what we need to do is step back and say again, what is the problem we are trying to solve with this very complex structure?  (p26)

2014 0204 - GOV (House) - The Federal Insurance Office’s Report on Modernizing -  [PDF-214pVIDEO-YouTube]

It is hard to fix a system that has not been analyzed.  (p14)

-- J. Robert Hunter

2003 0506 - GOV (House) - Increasing the Effectiveness of State Consumer Protection - [PDF-123p

  • MR. WILCOX: What's the real problem then, Shane?
  • CHALKE: I'll say before I answer that I don't have a good answer. 

1995 - SOA - Current Developments Surrounding Regulations and Standards of Life and Annuity Products, Society of Actuaries - 18p

  • Brad Barks (Life USA) commented that there were many good building blocks on the models, but there had not been good objectives identified.

1994-1. NAIC Proceedings, (353)

  • Mr. Myers reemphasized that without the benefit of the originally anticipated study to determine the problem, a regulation would be produced before the problem is clearly defined.

1991-1A, NAIC Proceedings - Life Marketing Practices to Senior Citizens Working Group (601)

Now, each one of those people is solving a different problem.

One of the suggestions that I have for you, when you go into situations like that, is to ask a very simple question:

  • "What problem are we trying to solve?"
  • You’ll be surprised at the answers you’ll get.

--  Steven Weber

2003 - SOA - The Discipline of Getting Things Done, Society of Actuaries - 19p

  • And, Mr. Chairman, as they say in baseball—and I understand you have an interest in baseball these days—you cannot tell the players without a scorecard?
  • Well, it is far too easy for consumers these days to lose track of balls and strikes on how their insurance product works for them, and that is leading to the type of problems we have heard about this morning.

-- Statement of David J. Lyons, Commissioner, Iowa Insurance Department, And Chairman, Disclosure Task Force, National Association of Insurance Commissioners

1993 0525 -  GOV (Senate) - When Will Policyholders Be Given The Truth About Life Insurance? - [PDF-354p-GooglePlay, No Video]->Not on govinfo.gov 

  • Bruce Ferguson (ACLI) said more than 40 states have adopted Model #582.
  • He noted that, in its comment letter, the ACLI suggests enhancing simplicity and transparency of the narrative summary in Model #582 to reflect the significant changes in the marketplace since Model #582 was adopted 20 years ago, including the demographics of consumers who buy life insurance, the product designs developed to meet the changing needs of consumers and the technology consumers use to obtain information about life insurance products.

2015-3, Proceedings

3. (LIAC) Appointed a New Working Group to Address Life Insurance Policy Illustration Issues

  • Mr. Lovendusky said the ACLI work group discussed whether the charge should include revising the Buyer’s Guide, which was a suggested addition to the charge from the American Academy of Actuaries (Academy).
  • While the ACLI work group did not oppose including the Buyer’s Guide, some on the work group thought that revisions to the Buyer’s Guide might work instead of revisions to the models.
  • However, Ms. Cude pointed out that the Buyer’s Guide has a different purpose from the policy summary and that revisions to one would not take care of the other because the Buyer’s Guide is designed to be educational, while the policy summary is informational and explains a particular policy.

2016 0403, NAIC Proceedings, LIIIWG CC

2016/4/3, LIIIWG CC, NAIC Proceedings (6-8)

  • Mr. Schwartzer reminded the Working Group that the Life Insurance Illustration Issues (A) Working Group came out of concerns raised when the Indexed Universal Life (IUL) Illustrations (A) Subgroup under the Life Actuarial (A) Task Force was working on guidance for IUL policy Illustrations that would result in consumers being better able to understand the product performance and interest variability of IUL products.
    • During the IUL Illustrations (A) Subgroup’s discussions, interested parties expressed a need to take a broader look at how all products are explained to consumers

2016/10/20 - LIIIWG CC, 2016-3 NAIC Proceedings

a. Purpose of Policy Overview Document

  • Birny Birnbaum (Center for Economic Justice — CEJ) suggested that the policy overview document should be a tool to aid consumers in comparing plans across companies, but not to choose between types of plans.
  • Mr. Wicka explained that he envisions the policy overview as being a high-level document including the basic elements of the plan.
    • He said the policy overview should enhance consumer understanding, but not replace the buyer’s guide or the details in the illustrations.
  • Ms. Mealer said she agrees with Mr. Wicka’s description of the intended purpose of the policy overview document.
  • ....perhaps, this came out of the fact that Illustrations were not as clear.
  • Maybe there's been complaints. 
  • And the purpose of this entire committee was to provide some kind of summary to make it a little bit more clear.

--Teresa Winer (GA)

2019 0903 - LIIIWG, NAIC, <Bonk>

ICP 24
Summary of comments received

There is still a lack of articulation around the nature of systemic risk in the insurance sector.

  • For any activity to be deemed potentially systemically risky there needs to be a clear transmission channel into wider financial markets, with the quantification of the nature, scale and materiality of activities/exposures in the context of the size of the market as a whole.
  • In terms of global collaboration and cross-sectoral consistency, it is not clear how this will work in practice.

The guidance under ICP 24.3.4 mandates supervisors to require insurers to take action necessary to mitigate any particular vulnerabilities that have the potential to affect financial stability.

  • No actual guidance is given as to how vulnerabilities could be mitigated.

IAIS response

As per the Holistic Framework for Mitigating Systemic Risk in the Insurance Sector, the IAIS has developed an approach for assessing systemic risk informed by both an entity-based
analysis and an activity-based analysis.

  • These are based on the Individual Monitoring data collection, Sector-Wide Monitoring data collection and their interplays.
  • The Holistic Framework describes the IAIS’ view in terms of transmission channels of systemic risk.
  • The ICP 24 statement has been amended in this respect so it captures the macroprudential supervision around transmission of systemic risk as well. ICP 24.2.11 language has been amended to better reflect the cross-sectoral consistency.

Also, the scope of ICP 24 is broader than systemic risk assessment, focusing on all aspects of macroprudential supervision.

These elements will be further developed and built upon in the planned Application Paper on Macroprudential Supervision.

2019 - IAIS - Main_public_consultation_comments_received_and_resolution_to_holistic_framework_supervisory_material.pdf