New Jersey Assembly Bill A463

New Jersey 2022-2023 Regular Session

• Introduced: 1/11/22
• Refer: 1/11/22
• Failed: 5/2/22

Caption

Revises law concerning insurance holding company systems.

Impact

The implementation of the GCC and LST will provide regulators with additional tools to improve oversight of insurance groups. The GCC allows regulators to analyze the entire holding company's capital position, while the LST helps evaluate its liquidity risk based on specific stress scenarios. These changes are expected to enhance the systematic evaluation of financial conditions and risks across insurance conglomerates, ultimately contributing to the stability of the financial sector at the state level.

Summary

Bill A463 revises current state law concerning insurance holding company systems to align with updated recommendations from the National Association of Insurance Commissioners (NAIC). The bill introduces a requirement for a Group Capital Calculation (GCC) and a Liquidity Stress Test (LST), aimed at enhancing the ability of state regulators to assess the financial stability and risk exposure of insurance holding companies. These measures are part of a broader effort to maintain compliance with international agreements focused on insurance regulation.

Contention

While proponents argue that these revisions will improve financial oversight and state compliance with international standards, there is potential for contention regarding the confidentiality provisions outlined in the bill. The requirement for results from the GCC and LST to be confidential has raised concerns about transparency and accountability. Some stakeholders argue that this lack of public disclosure could hinder market confidence and the ability of stakeholders to fully assess the solvency and risk profile of the insurance entities in the market.