The National Association of Insurance Commissioners should work with states to reduce state-law reliance on the big credit rating agencies, an NAIC panel says.
The Rating Agency Working Group makes recommendations about reliance on the work of the "nationally recognized statistical rating organizations, or "acceptable rating organizations," in a report adopted by the NAIC's Financial Conditions Committee.
The working group recommends that several working groups at the NAIC, Kansas City, Mo., should take actions to change the way insurers and regulators use ratings.
The working group was formed in February 2009, in the wake of a credit market crisis that rocked the U.S. financial system.
The Investment of Insurers Model Act Revision Working Group should "consider encouraging state regulators to identify references to AROs in state insurance laws and to consider proposing modifications that refer to alternative risk assessment methods or providers so as to lessen reliance on AROs," Rating Agency Working Group members write in their report.
