|The financial health and solvency of insurance companies is the ground on which the structure of U.S. insurance regulation is built. Through the NAIC, state insurance regulators coordinate licensing applications and procedures, accounting practices and procedures, statutory financial statement and other disclosures, collection and analysis of industry financial data, the valuation of industry capital and investments, and on-site risk-focused examinations. The NAIC provides a large variety of tools with which state regulators perform solvency oversight, and the multi-state system facilitates a large number of perspectives which strengthen the overall regulatory system and the industry.
This coordination of peers extends to the process of state insurance department accreditation, through which departments undergo a comprehensive, independent review every five years to ensure the departments continue to meet baseline financial solvency oversight standards. The accreditation standards require state insurance departments to have adequate statutory and administrative authority to regulate an insurer's corporate and financial affairs, as well as the necessary resources to carry out that authority.
With the passage of the Dodd–Frank Wall Street Reform and Consumer Protection Act and the Affordable Care Act, the NAIC and regulators have worked with federal agencies and regulators to ensure the proven nationwide system of state-based solvency insurance regulation is adequately considered and not impaired.
In 2011, supplemental financial data was collected from health insurers as a result of provisions of health care reform, while Dodd-Frank required regulators to review proposed rules over issues such as over-the-counter derivatives, reinsurance, surplus lines and receivership.
In addition to issues prompted by federal action, regulators completed a process that began in 2009 to revise statutory accounting principles for current and deferred federal and foreign income taxes and current state income taxes. The focus of these changes was deferred tax assets (DTA), and the updates improve the treatment and regulation of various industry tax-planning activities and their impact on company valuations.