b'INSURANCE REGULATORY|US/NAICengaged in the USs foray into insureran insurer finds itself in insolvency following an IBT restructuring legislation. As described in ouror CD transaction. The risk of gaps in Guaranty 2020 Year In Review, NCOIL had issued a ModelFund coverage are particularly prevalent in those IBT Act closely resembling Oklahomas IBTstates that have adopted versions of the NAICs legislation, and the NAICs Financial ConditionGuaranty Association Model Acts, because certain (E) Committee had established the Restructuringdefinitional terms like Covered Claim, Member Mechanisms (E) Working Group to evaluateInsurer, Insolvent Insurer in the Model Acts insurer restructuring legislation and to issue awere not drafted to capture insurers or white paper on the subject. Our 2020 Year Inpolicyholder claims that have been impacted by an Review also reported on the first IBT in the US,IBT or CD transaction. To address these concerns, which was completed in Oklahoma.it is expected that the Working Group will approach the NAIC Receivership (E) Task Force for NAIC Restructuring Mechanisms (E)guidance, given the Receivership Task Forces Working Group Adopts White Paper deeper expertise with respect to the Guaranty Association Model Acts.On October 22, 2021, the NAICs Restructuring Mechanisms (E) Working Group (the Working2. Assumption Reinsurance LawsGroup) published its draft white paper on insurerAssumption Reinsurance Laws generally provide Restructuring Mechanisms (the White Paper).policyholders with certain notice and consent Though the White Paper makes clear that it is notrights in connection with the novation of their intended to establish an official position by thepolicies to a different insurer. The White Paper NAIC regarding IBTs or CDs, it is a useful platformexpresses concern that a states adoption of IBT or from which each state and its various regulatoryCD legislation may vitiate these policyholder authorities may make their own determinations onnotice and consent rights, particularly if the IBT or how best to proceed with restructuring legislation.CD legislation is drafted such that insurers are not To this end, the White Paper identifies a few specificrequired to provide notice to policyholders or areas of insurance regulation that are implicated byobtain policyholders consent in connection with a state adoption of IBT or CD legislation, including (1)restructuring transaction. In effect, IBT or CD Guaranty Fund Coverage; (2) Assumptiontransactions could be used by insurers, at least in Reinsurance Laws; (3) Long-Term Care Insurance;part, to circumvent these policyholder rights. and (4) Jurisdictional Considerations, each of whichUltimately, the White Paper concludes that this is briefly discussed below.particular issue is beyond resolution by the Working Group and should be left for courts to 1. Guaranty Fund Coverage determine in the future. State Guaranty Funds exist to protect policyholders in the event of insurer insolvency.3. Long-Term Care InsuranceThe White Paper raises concerns that technicalThe White Paper asserts that Long-Term Care gaps may exist in Guaranty Fund coverage where(LTC) coverage is likely not appropriate for 80|Global Insurance Industry Year in Review 2021'