(National Harbor, Md.) – First-term Oklahoma Insurance Commissioner John D. Doak said today that a major deficiency inherited by his administration in January has been corrected according to the national association that establishes and monitors the regulatory protocols of state insurance departments.
A financial committee of the National Association of Insurance Commissioners (NAIC) confirmed Wednesday afternoon that the Oklahoma Insurance Department had corrected deficiencies found in an inspection that took place before Doak assumed office. A vote to approve the accreditation was held Wednesday during a gathering of NAIC’s Financial Regulation Standards and Accreditation Committee at the organization’s Fall National Meeting in National Harbor, Md.
“This is a noteworthy accomplishment,” Doak said from the convention site, across the Potomac River from Washington, D.C. “A lot of work went into these improvements and this accreditation is evidence of increased professionalism and a more businesslike approach to insurance regulation at the Oklahoma Insurance Department.”
Accreditation is vital so that other states can trust Oklahoma’s regulatory work and accept that firms domiciled in Oklahoma and thus vetted by OID are as sound as the Oklahoma Insurance Department deems them to be.
“Since its establishment, the NAIC’s accreditation program has ensured a more uniform and efficient approach to solvency regulation in the United States,” said Jim Donelon, Louisiana Insurance Commissioner and Vice President of the NAIC. “The accreditation program has played a vital role in assisting states in the implementation of laws, practices and procedures, and obtaining the personnel necessary to promote accountability as well as sound financial solvency regulation.”
The NAIC’s President, Iowa Insurance Commissioner Susan Voss, complimented Oklahoma’s improvements.
“The NAIC Financial Regulation and Accreditation Standards program is a testament of our success as state regulators to hold companies accountable to policyholders through strict solvency standards and effective implementation of those standards,” Voss said Wednesday evening. “We are pleased with Oklahoma’s commitment to these standards.”
An accreditation team from the NAIC conducted a review of the OID’s regulation functions in February 2010, uncovering serious concerns within the financial examination section of the Oklahoma agency. As a result of the subpar review, the OID was scheduled to undergo a re-review about 18 months after that February 2010 inspection instead of receiving the normal five-year accreditation.
From Sept. 19-21 this year, the OID underwent the mandated re-review by an NAIC accreditation team that was substantially the same as the team that visited in February 2010. The re-inspection was intended to verify that the concerns stated in the prior review were addressed. Inspectors evaluated OID’s implementation of a more “risk-focused” exam process, which is an NAIC requirement as of January 2010. Prior to the risk-focused approach, there was more emphasis placed by regulators on verifying account balances than on identifying risks that an insurance organization faces and evaluating the internal controls that the company has put in place to mitigate those risks.
NAIC’s accreditation review team left Oklahoma this year satisfied that its prior concerns were appropriately addressed and corrected. The NAIC found that “substantial improvement” had occurred in OID’s processes as the Doak administration implements new and improved protocols. The re-review team leader recommended that Oklahoma be returned to a full, five-year accreditation status, and that standing was confirmed Wednesday by NAIC’s Financial Regulation Standards and Accreditation Committee, which consists of 16 insurance commissioners from various states.
With the remainder of its full five-year accreditation restored, the Oklahoma Insurance Department’s Financial Division won’t be re-inspected until 2015.
“During my campaign I promised to fix what was wrong at the Oklahoma Insurance Department and to build upon the things that the department might be doing right,” Doak said. “The Financial Division’s new and full accreditation by the NAIC is a major statement that the Oklahoma Insurance Department is headed in the right direction.”
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About the Oklahoma Insurance Department
The Oklahoma Insurance Department, an agency of the State of Oklahoma, is responsible for the education and protection of the insurance-buying public and for oversight of the insurance industry in the state.