Insurance Industry:

Regulators Are Less Active in Encouraging and Validating Year 2000 Preparedness

T-GGD-99-56: Published: Mar 11, 1999. Publicly Released: Mar 11, 1999.

Contact:

Thomas J. McCool
(202) 512-8678
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO discussed the banking, securities, and insurance regulators' efforts to validate their year 2000 preparedness.

GAO noted that: (1) banking and securities regulators have supplied guidance and direction regarding year 2000 problems, while state insurance regulators GAO contacted have provided little guidance to their regulated institutions; (2) within the banking industry, the Federal Financial Institutions Examination Council (FFIEC), through its member agencies, has taken actions to: (a) raise banking industry awareness regarding the year 2000 problem; and (b) provide financial depository institutions with year 2000 guidance; (3) within the securities industry, the Securities Exchange Commission (SEC) has engaged in similar efforts to promote and encourage year 2000 readiness, primarily through the securities industry's self-regulatory organizations (SRO); (4) but state insurance regulators GAO contacted and the National Association of Insurance Commissioners have not been as proactive in this area; (5) FFIEC has issued interagency guidance to federally regulated depository institutions on year 2000 topics such as testing, contingency planning, and business risk; (6) although SEC has issued limited guidance on year 2000 problems, the Securities Industry Association and other SROs have issued guidance to their members; (7) with a few exceptions, state insurance regulators GAO contacted have not provided insurance companies with formal guidance or regulatory expectations regarding year 2000 readiness; (8) financial regulators have two principal ways of verifying the year 2000 readiness of their regulated institutions: (a) on-site examinations; and (b) broad scale testing; (9) banking regulators rely primarily on examinations targeted directly at issues related to year 2000 problems to validate the progress and status of their regulated institutions; (10) this will provide regulators with not only a snapshot of institutions' status now, but a perspective of their progress over time; (11) the interconnectedness of the securities industry lends itself to broad scale testing to an even greater extent; (12) with the approval of SEC, over 400 institutions are participating in street-wide testing; (13) street-wide testing is the principal year 2000 validation vehicle in the securities industry; and (14) validation by insurance regulators of the year 2000 readiness of insurance companies began late, and, in most states, lacks the vigor demonstrated by bank and securities regulators.

Apr 7, 2014

Mar 28, 2014

Feb 25, 2014

Feb 13, 2014

Jan 16, 2014

Jan 6, 2014

Dec 18, 2013

Dec 11, 2013

Nov 26, 2013

Looking for more? Browse all our products here