Alliance Comments on Proposed Changes to Fla. Holding Company Regulations

The Alliance of American Insurers (AAI) has filed formal comments in regards to a proposed rule by Florida insurance regulators that would reportedly change regulations regarding insurance holding companies in that state.

“The proposed Florida regulation would require one-third of the
directors on the board of a domestic insurer, and one-third of the
membership of any board committee to be composed of outside directors,” said Lenore Marema, the Alliance’s vice president of legal and regulatory affairs. “These are optional provisions in the NAIC Model Holding Company Act, which Florida has now incorporated into its regulations.

“The Alliance believes that Florida would have to enact outside director requirements into its holding company law first, before it can use the NAIC model provisions in its regulations. Outside directors legislation has failed recently in Florida so that it seems that the Department is now trying to accomplish by regulation what the legislature chose not to require under state law. Only a few states have enacted the NAIC model and those that did adopt it have included exceptions.

“We don’t believe good corporate governance can be mandated by setting stringent numerical requirements for boards and committees,” continued Marema. “There is no ‘one-size-fits-all’ rule for good corporate governance. Under the federal Sarbanes-Oxley Act, and other statutory and common law duties imposed on board members, there are sufficient incentives already in place to assure corporations will have a responsible structure and effective corporate governance.”

“The Alliance supports flexibility in state laws regarding governance
and structure of holding companies,” said William Stander, the
Alliance’s government affairs representative in Tallahassee. “We also
believe it is important that corporate governance laws only apply to
domestic companies so that insurers are not subject to dual and
conflicting regulation from multiple states. A proposal that could cause interstate problems could paint an unfavorable picture of state
insurance regulation at a time when that state system of regulation is under scrutiny by Congress.”

Stander also said a proposal requiring all contractual agreements
between an insurer and any person within its insurance holding company system to be in writing and signed by both parties is unduly burdensome.

“The requirement would make it more difficult and expensive for licensed insurers to do business in Florida, with few regulatory benefits,” added Stander.

Topics Florida Legislation