One of the highlights of AIRROC’s Chicago Regional Education Day was the keynote address by Dana Popish Severinghaus, Director of the Illinois Department of Insurance. Director Popish Severinghaus has served since January 2021 and brings extensive legal, policy, government relations and insurance industry-related experience to her role heading a state regulatory agency. A video replay is available on the AIRROC On Demand platform.
In opening remarks she expressed her excitement in expanding the Department’s participation in AIRROC to gain knowledge, share best practices and innovative ideas for managing risk in the reinsurance and run-off industry. Recognizing that the conventional methods of managing legacy has downsides, alternative restructuring options are becoming available to insurance companies to more efficiently restructure their business to achieve capital, operational and administrative efficiencies. Director Popish Severinghaus advocates for active involvement and a collaborative approach with the industry to seek solutions. Insurance regulators are well positioned to provide direction and guidance, along with the necessary safeguards to avoid pitfalls and protect consumers. Innovation is a fast moving train and regulators are not just along for the ride. Only a few years ago, regulators had limited expertise in IBTs and Company Divisions and since then, have made great strides.
In 2018 Illinois passed its Company Division Law and the Illinois Department completed its first division review with Allstate Insurance Company in February of 2021. The Allstate transaction was the first plans of division in the U.S. market to restructure its insurance operations representing a significant step forward for the insurance industry to expand the application of restructuring mechanisms
Just recently, the Illinois General Assembly passed an IBT law that goes into effect January 2025. This law brings additional flexibility to domestics and out of state transferring insurers and the Department is expecting transitions to ramp up.
These advanced restructuring transactions present many challenges for state regulators because effective regulation requires additional resources and unique and specialized expertise. Outside expert consultants were instrumental in filling the gap in the Allstate division as the Department works to build up in-house capacity. However, hiring outside experts remains a challenge. State procurement procedures are a time consuming process, which can up to take six months to a year. In anticipation of additional restructuring transactions, the Department plans to establish a pipeline of consultants and will share the RFP with AIRROC since many of its members have the unique and specialized expertise needed.
The pillars of her leadership are to cultivate solid working relationships, open communication, accessibility and transparency and to manage expectations for consumers and companies alike. The Illinois Department takes pride in its innovative regulatory approach and efforts to drive greater collaboration with market participants, consumers and wider stakeholders to reach a common objective.
