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Regulatory Update

RI governor nixes lawsuit bill, NAIC takes action and accounting standard delayed.
  • August 2019
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Auto Insurance: Rhode Island Gov. Gina Raimondo vetoed a bill that would have given motorists a right to sue automobile insurers and hit them with triple damages and attorneys' fees if they unfairly declared a vehicle a “total loss” instead of paying for repairs.

“If enacted, Rhode Island would be the first state in the nation where private individuals can sue their insurers for up to three times the amount of their damages if they feel their vehicle has been unfairly totaled,” she said.

“Adding a private cause of action providing treble damages and attorneys' fees would be unprecedented nationally, could trigger a significant volume of potentially frivolous litigation and will ultimately drive insurance premiums—already among the highest in the nation—even higher for Rhode Island drivers.”

Reinsurance: The National Association of Insurance Commissioners in a plenary meeting approved revisions to the Credit for Reinsurance Model Law and Regulation, it said in a statement.

The changes make the models consistent with provisions of covered agreements with the European Union and United Kingdom regarding reinsurance collateral requirements, it said.

In addition to conforming to the requirements in the covered agreements, the changes will provide reinsurers domiciled in NAIC-qualified jurisdictions other than the EU—Bermuda, Japan and Switzerland—with the possibility of similar reinsurance collateral reductions, it said. Revisions to the model were considered by the membership and included input from stakeholders, companies and the federal government, it said.

Group Capital Calculation Tool: Testing of an analytical tool to better understand and quantify financial risks to insurance groups and improve policyholder protections is under way the National Association of Insurance Commissioners has announced.

Preliminary testing of the Group Capital Calculation tool began with 30 U.S.-based firms, including property/casualty, life, and health insurers, the NAIC said in a statement.

Results of the testing will inform the final calculation, an NAIC key priority expected to be adopted in 2020, it said.

International Accounting Standard: An international accounting standard for insurance contracts will be delayed another year to 2022 as the International Accounting Standards Board published a new exposure draft with proposed changes.

The IASB proposed amendments to the insurance contracts standard, IFRS 17, for public consultation.

“The aim of the amendments is to continue supporting implementation by reducing the costs of implementing the standard and making it easier for companies to explain their results when they apply the standard,” the IASB said in a statement.

The IASB said its proposed amendments “are designed to minimize the risk of disruption to implementation already underway.”

The proposals “do not change the fundamental principles of the standard or reduce the usefulness of information for investors,” the board said.

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