GAO Report

Question 1

Requirements for insurers by NAICs uniform application process

Answer 1

• show that it meets states minimum statutory capital & surplus requirement
• identify whether it is part of a holding company system
• submit biographical affidavits of its officers, directors & key managers

Question 2

List some powers of regulators of non domiciliary states in regards to insurers after licensing

Answer 2

• conduct financial exams
• issue a “cease-and-desist” order to stop the insurer from operating in the state
• withdraw the insurers license to sell in the state

Question 3

What must an RRG submit to the regulators of each state in which it does business

Answer 3

• Provide a copy of the plan of operation or feasibility
• Provide a copy of the groups annual financial statement (that should include a SAO)
• Submit to an examination to determine its financial condition, if the domiciliary regulator has not conducted one

Question 4

Difference between pure captives and group captives

Answer 4

Pure captives insure a single parent; Group captives insure a group of companies

Question 5

List 2 differences between group captives and RRGs

Answer 5

1. Group captives do not need to insure similar risks (unlike RRGs)
2. Captives are able to provide property coverage (unlike RRGs)

Question 6

Purpose of NAIC accreditation

Answer 6

Establish & maintain standards to promote sound insurer financial solvency regulation

Question 7

Advantage of risk focused exams for RRGs

Answer 7

More uniform regulatory activities among states will generate more trust among state regulators

Question 8

Disadvantage of risk focused exams for RRGs

Answer 8

Could increase the cost & financial burden on RRGs:
* Regulators may need to hire more specialized auditors, passing on the costs to the RRGs (via higher examination fees)
* RRGs are typically small. It is possible that the impact on these small RRGs may be excessively expensive, without producing the corresponding benefits