NAIC Adopts New Receivership Model Act

In December 2005, after a four-and-a-half year process, the National Association of Insurance Commissioners (NAIC) formally adopted a new Model Act entitled the Insurer Receivership Model Act (IRMA). According to the NAIC, the Model Act is an important step in the NAIC’s modernization efforts and is intended to comprehensively address the administration of an impaired or insolvent insurer from conservation and rehabilitation to the liquidation and winding up of a receivership estate.

The NAIC received input from a variety of industry sources in drafting the IRMA, including guaranty associations, trade groups, insurers, and receivers. Many participants in the process, while favoring at least some of the changes, criticized some of the changes and the NAIC’s failure to adopt other changes.