Highlights from the NAIC Summer 2024 National Meeting

In our recent webinar, members of the Eversheds Sutherland Insurance Practice Group discussed noteworthy developments from the National Association of Insurance Commissioners (NAIC) Summer National Meeting that was held in Chicago, Illinois August 12-15. The highlights include:

• The Life Actuarial Task Force (LATF) continued its discussion of Asset Adequacy Testing (AAT) for reinsurance ceded by life insurers and exposed a strawman draft AAT for Reinsurance Actuarial Guideline Draft for a 60-day public comment period ending October 11. Interim comment periods have also been established for two of the eight sections of the Draft Guideline: Section 2 (Scope) comments are due by September 19, and Sections 5.C and 7 (Aggregation) comments are due by October 3.
• TheFinancial Condition (E) Committee and its working groups and task forces continue to be one of the most active areas at the NAIC.
  • E Committee released two documents for a 60-day public comment period ending October 14: a proposed RFP for assistance in developing a due diligence framework for NAIC-approved credit rating providers, and an updated draft Framework for Regulation of Insurer Investments and related feedback on industry comments.
  • The Valuation of Securities Task Force (VOSTF) adopted amendments to the Purposes and Procedures Manual of the NAIC Investment Analysis Office authorizing the procedures for the NAIC’s discretion over NAIC designations assigned through the filing exempt process. E Committee is expected to adopt the amendments later this week.
  • The Risk-Based Capital Investment Risk and Evaluation (E) Working Group and VOSTF provided updates on their respective workstreams relating to the regulation of insurer investments in structured securities.
• The Life Insurance (A) Committee adopted Accelerated Underwriting in Life Insurance Regulatory Guidance and Considerations. The Guidance is designed to provide a framework for state insurance regulators when reviewing life insurers’ use of accelerated underwriting programs and is divided into three areas of focus: (1) regulatory considerations; (2) strategies for review; and (3) requests for information.
• The Privacy Protections (H) Working Group discussed next steps on proposed amendments to the Privacy of Consumer Financial and Health Information Regulation #672. The Working Group exposed proposed amendments to Article II, Section 5 (Third-Party Arrangements) of Model #672 for a 30-day public comment period ending September 18. The Working Group is also seeking volunteers for a drafting group to assist in drafting amendments to Model #672. Volunteers are requested to submit their names for consideration by September 6.
• The NAIC International Insurance Relations (G) Committee provided an update on whether the NAIC-preferred Aggregation Method (AM) yields “comparable outcomes” to the IAIS-developed International Capital Standard (ICS) in advance of an anticipated IAIS vote on the measure in December 2024. G Committee Chair Beth Dwyer (RI) voiced the NAIC’s position that the ICS and AM yield comparable outcomes and that the ICS does not work for the United States insurance regulatory framework.
• The Executive Committee and Plenary adopted a controversial proposal to require property/casualty insurers to conduct a climate scenario analysis and disclose the analysis to regulators as part of their respective risk-based capital (RBC) reports. The proposal was adopted over opposition from 12 states (and one abstention) days after the NAIC received a letter from three Congressional Democrats seeking a status report on the NAIC’s climate-related workstreams.

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