This year's 57th meeting of the National Association of Independent Insurers takes place in Los Angeles.
This year has proved a busy one for the National Association of Independent Insurers (NAII), with the unprecedented events of September 2001, alongside the deterioration in long-tail liabilities and stock markets, causing an unparalleled market dislocation. Issues arising from last year's attacks on America have taken up much of the NAII's time, as proposed legislation such as the US Patriot Act has seen the association putting forward its members' interests to the US government.
In September, amended rules on the Patriot Act's implementation, with certain exclusions for property/casualty insurers in the money laundering provisions, attracted the NAII's welcome. "Section 352 of the US Patriot Act required financial institutions to establish anti-money laundering programs," explained NAII assistant vice president, government relations, Julie A Gackenbush. "The newly-proposed rules apply the anti-money laundering requirements to insurers that offer products with investment features or features of stored value, such as annuities and life products. The property/casualty insurance business involves personal lines, such as homeowners, auto insurance or commercial policies. These lines of business require insurers to collect premium for policyholders, but do not involve setting up deposits or investment accounts that could be easily used for money laundering by terrorists. NAII is pleased that the Treasury recognises the inherent differences and addressed the regulations to areas of greatest risk."
Back in April, the NAII joined forces with the Alliance of American Insurers and the National Association of Mutual Insurance Companies to lobby the Treasury Department on exemptions for their property/casualty members. Section 352 of the Patriot Act requires that financial institutions must avoid knowingly becoming involved in transactions with suspected terrorists. It also stipulates that companies must adopt and maintain a written anti-money laundering policy that incorporates internal policies, procedures and controls based on an assessment of the money laundering exposures. In addition, companies must designate a compliance officer and set up an employee training programme, tested by an independent audit function.
Kathleen Jensen, NAII insurance service counsel, commented: "The US Patriot Act anti-money laundering provisions are clearly directed at financial institutions such as banks and security brokers, not property/casualty insurers. The Act could apply to life insurers, but clearly does not have application for property/casualty insurers because premium does not earn interest nor is it kept for investment purposes. Property/casualty insurers do not establish, maintain, administer or manage a private banking account or keep premium for investment purposes for the policyholder."
Despite the NAII's success with section 352, uncertainty still hangs over another of its concerns - the establishment of terrorism insurance legislation. In late September, the NAII sent a letter to Congress, outlining the reasons why it feels such legislation is vital. "NAII strongly supports a temporary federal terrorism reinsurance program that is simple in concept and administration, with the least amount of federal regulatory intervention," said Carl Parks, senior vice president for government relations at the NAII. "Any federal program should provide for a true risk-sharing mechanism in the short run until the industry market mechanisms can respond."
Issues brought up in the letter include:
With issues such as these still very large on the table, this year's NAII meeting promises to be a lively affair. With speakers including chief economic emeritus of the New York Stock Exchange, Dr William Freund, former Secretary of Defense, the Hon William S Cohen, and former Speaker of the US House of Representatives, Newt Gingrich, the meeting promises to give attendees a real view of the big picture.