Insurance Insights

April 25 - May 1, 2016

Accredited … with flying colors

By Allen Kerr

I am proud to report about how the hard work of a key group of professionals at the Arkansas Insurance Department has resulted in national recognition from our peers, and a five-year accreditation.

Recently, AID received its accreditation report from the National Association of Insurance Commissioners (NAIC) at its spring meeting in New Orleans. I am proud of the very hard and diligent work by AID’s accreditation team over the last few months to not only ensure we remain accredited and able to work for Arkansas taxpayers, but do so with flying colors.

In fact, Arkansas’ accreditation report was so clean, it did not include the typical cover sheet that listed even minor issues identified by reviewers.

Accredited state insurance departments undergo comprehensive, independent review every five years to ensure they meet financial solvency oversight standards.  The NAIC accreditation program establishes and maintains sound solvency regulation standards. It provides for the effective regulation of multi-state insurance companies with emphasis on each state’s:

– financial solvency laws and regulations;

– financial analysis and examination capabilities;

– organizational and personnel practices; and

– insurer organizational review, licensing and change of control of domestic insurers.

The concept of accrediting state insurance departments began in the mid-to-late 1980s when several large insurance companies became insolvent. In May 1988, as a response to the insolvencies, a congressional inquiry began looking at the insolvencies. Subsequently, in September 1988, the NAIC began discussing and shaping the Financial Regulation Standards and Accreditation Program. In June 1989, the NAIC adopted the Financial Regulation Standards and a formal certification program in June 1990.

To become accredited, the state must submit to a full on-site accreditation review. During this review, the team of independent consultants reviews the department’s compliance with the standards to develop a recommendation regarding the state’s accredited status. For a state to remain accredited, an accreditation review must be performed at least once every five years with interim annual reviews.

I want to again thank, and salute, the hard work (including holidays, weekends, and after hours) that went in to achieving this success.

It is my pleasure to continue to serve you as your Insurance Commissioner. For more information on the Arkansas Insurance Department, please visit http://insurance.arkansas.gov, follow us on Twitter at http://twitter.com/ARInsuranceDept and Facebook at http://www.facebook.com/ArkansasInsuranceDepartment.  

Allen Kerr was appointed Arkansas Insurance Commissioner on Jan. 13, 2016, by Governor Asa Hutchinson.