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Financial Exams, Ft. Hood Memorial, and a Father’s Wisdom…

NAIC Plans Review of RBC System – Don’t know if you’ve seen the article in today’s National Underwriter, but the NAIC is planning to conduct the first thorough review of the risk-based capital (RBC) system in nearly two decades.  Regulators use the RBC ratio to adjust the value of an insurer’s holding to reflect the estimated level of risk and, after the adjustments are made, to determine whether the insurer has enough capital to meet its obligations.  Regulators may step in when an insurer’s RBC ratio falls sharply or falls below a “regulatory intervention” level – typically 300% or lower.  The NFCA provides members a worksheet to calculate their RBC ratio and submit it to those state regulators who require fraternals to file such data.

According to an NAIC spokesperson, “It is time for a holistic evaluation of the RBC formulas, factors, and methodology.”  The regulators association is looking to its Capital Adequacy Task Force to provide recommendation on the potential scope of changes for RBC and the timeline for implementation of those changes.  One issue of concern is the selection of the calibration (or “safety”) level and time horizon for the RBC, in recognition of the fact that the RBC is designed more to identify weakly capitalized companies rather than to mirror a company’s economic target capitalization.

While not stated in the National Underwriter article, one of the issues the NAIC is addressing is whether to enact a model law that would apply RBC standards to fraternal life insurers, who have been exempt from such requirements in most states.  New York was the first state to enact such a requirement in 2008.  Minnesota recently enacted a similar law.  And regulators in Ohio, Pennsylvania, and Wisconsin – three states with significant fraternal populations – are considering RBC requirements. 

NFCA worked closely with regulators and legislators in New York and Minnesota to craft legislation that accomplished our mutual goal of protecting consumers and that also ensured that fraternals were treated fairly and were not put at a competitive disadvantage in the marketplace.  The association continues to work with public policymakers at the NAIC and on a state-by-state basis on this issue.  Your Board considers fraternal solvency one of the most important public policy issues facing the fraternal system and the enactment of responsible legislation that provides regulators the tools they need to protect consumers while allowing fraternals to carry out their unique mission is the most effective way to accomplish this objective.

You can bet NFCA will be representing your interests as the NAIC delves deeper into its examination of the RBC system.  And we’ll be calling on the membership to assist us to review the various proposals, provide feedback to regulators, and advocate for the enactment of rules and statutes that are in the best interests of the 9 million members of the fraternal system.

ERA Updates Governance – The members of Equitable Reserve Association (ERA), a Neenah, Wisconsin-based member society, last week passed sweeping changes to the organization’s bylaws and constitution that dramatically modernize how the organization is governed.  The most significant changes include the elimination of the election of the association’s executive officers by the general membership (they are now hired by the Board), the placement of increased responsibility on the Board for overall direction of the society, and the placement of term limits on Board members to facilitate leadership opportunities for younger members.  Congratulations to ERA President and CEO Mel Rambo and the society’s staff and volunteer leadership team for having the courage to tackle these tough issues and for presenting them to the membership in a way that made absolutely perfect sense.  Want to learn more about how ERA managed this modernization process?  Shoot Mel an e-mail at rambom@equitablereserve.com.  Want to learn more about how to enhance your society’s governance structure?  Check out NFCA’s new Web-based Board Institute Boot Camp modules, which are an affordable way to enlighten your board during quarterly board meetings.  Choose from four different sessions that teach best governance practices and allow for interaction and discussion relating to the focus of your board’s work.

SPJST Moves Forward with Ft. Hood Memorial – Last week the Killeen City Council voted to endorse the recommendation of the Killeen Civic and Conference Center Special Event Committee to have a permanent memorial placed on the grounds of the Killeen Civic and Conference Center.  The effort to finance, build, and maintain the memorial, which honors the soldiers killed in the 2009 Ft. Hood shooting, is being led by SPJST, an NFCA member society based in nearby Temple, Texas.  Check out this Associated Press news clip, which has appeared in dozens of newspapers throughout Texas.  If you want to help the SPJST in this effort, please contact SPJST President Brian Vanicek at vanicek@spjst.com.

NFCA Board of Directors Meets this Week – The NFCA Board of Directors meets this Thursday (June 17) for its regularly scheduled Board meeting.  A number of significant items are on the agenda for Board discussion, among them: the NFCA’s proposed rebranding initiative; policy position recommendations on state regulatory reform proposals in Pennsylvania and Ohio, as well as an overall policy position on the application of RBC standards to fraternals; an update on the association’s strategic planning initiative; and a site selection proposal for the 2013 Annual Meeting.  A full report on the Board’s discussion and decisions will be sent to all members within one week of the meeting.  Please contact me or any member of the NFCA Board if you have questions or comments about the issues that will be discussed at the meeting or if you would like the Board to address an issue important to your society or state fraternal congress.

Father’s Day Wisdom – Father's Day is this Sunday and that always reminds me of the wisdom my dad imparted to me before he passed away nearly 30 years ago.  Here are a few gems that I’m sure your father may have said to you in one form or another:

“Nothing good ever happens after 2:00 a.m.”  (Generally communicated in a rather loud voice when I arrived home well after the aforementioned hour…)

“If you’re going to be stupid, you better be tough.”  (Based on my behavioral track record, this was an almost daily utterance…)

“Are you convinced that staying in school is a good idea now?”  (My dad ran a cannery.  If it grew on a tree or a vine, he could put it in a can.  There are many physically demanding jobs in a cannery – most of which left you with a good deal of grease, grime, and fruit and vegetable detritus on your coveralls at the end of the day.  My dad made sure I got to sample every one of those jobs.  This was one of his favorite phrases used every time I came home dog-tired and filthy – and just before I left to stay out way past 2:00 a.m. In the end, however, I got the message…)

Share your fathers’ wit and wisdom with the world by posting your favorite “dad-ism’s” here…

One Response

  1. One impressionable phrase from my father, who was part of a large Czech-American family in our town, was not to let the women’s family or town gossip change your stance. “Always think for yourself,” he said, and it probably caused a very independent thinker after that.

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