NAIC “Grace Period” Will Allow Companies to Catch Up with Filing Requirements for Subsidiaries

Recent changes adopted by the NAIC will allow insurers to get into compliance with their subsidiary filing requirements.  Many insurers own small subsidiaries, such as an insurance agency, but have never made the appropriate filings with the NAIC.  The recent changes made by the NAIC will make compliance easier and less costly for those companies that have yet to fulfill the proper filing requirements.

At its December 2016 meeting, the NAIC adopted changes to the filing requirements for Subsidiaries, Controlled and Affiliated Entities (SCAs).  As defined in SSAP No. 97, an SCA is any entity within the holding company system that is controlled by the reporting entity.  SSAP No. 97 further states that control is measured at the holding company system level and is presumed to exist when the reporting entity and its affiliates hold voting power over 10% or more of an entity.

Under the new guidance, the NAIC has exempted non-admitted and “zero-value” SCAs from the annual Sub-2 filing requirement. Also, if an entity has never filed the one-time Sub-1 filing for a non-admitted or “zero-value” SCA, the NAIC is allowing those entities to submit the Sub-1 filing, free of charge. However, in order to take advantage of this benefit, the Sub-1 needs to be filed by September 30, 2017.

The NAIC also approved an exception to the annual Sub-2 filing for immaterial SCA’s as long as an exemption is provided by the domiciliary regulator.

Procedures for making a Sub-1 filing through the NAIC’s VISION system can be found on the NAIC website at

If you have any questions on the content of this article, feel free to contact Hank Straub at Brown Schultz Sheridan & Fritz.


Hank J. Straub, CPA

Principal and Treasurer

Hank is a Principal and Treasurer with BSSF.  He specializes in accounting and audits of property and casualty insurance companies and is one of the leaders of the BSSF Insurance Practice, which serves clients in the Mid-Atlantic Region, with a focus in Pennsylvania, New Jersey, Maryland, Delaware, Virginia, and New York. Find out more at