NAIC to Address Risk-Based Capital at Spring Meeting
The National Association of Insurance Commissioners (NAIC) will hold its spring meeting, with the new risk-based capital (RBC) task force taking center stage. Discussions will also cover data calls and asset adequacy testing, according to a report from AM Best.
Carrie Haughawout, senior vice president of life insurance and regulatory policy at the American Council of Life Insurers (ACLI), noted the spring meeting is critical for outlining priorities for the coming year. “It’s going to be a lot of conversations between stakeholders and regulators,” Haughawout said. “Our goal for this meeting is just to continue to promote that transparent dialogue between regulators and industry.”
The ACLI is particularly focused on the RBC task force and asset adequacy testing. The task force will assess how new risks should be integrated into RBC calculations and determine the necessary data. It will also review methods for addressing emerging risks not covered by the current framework as well as statistical safety levels. The group will also establish guidelines for recalibrating formulas to preserve their effectiveness.
“The task force is well-positioned to advance this effort,” Haughawout said, noting the ACLI’s support for a data-driven approach to RBC processes. She added that the initial organization call had more than 300 participants, signifying strong interest in the task force’s work.
Hilary Segura, department vice president and counsel for state government relations at the American Property Casualty Insurance Association, said the group’s future direction remains uncertain. Different approaches could require insurers to adjust their investment portfolios. “It’s part of the NAIC’s years-long efforts to take a holistic review of the framework for insurer investments,” Segura stated, adding that the initial focus will likely be on life insurers’ investments.
Beyond the new task force, the ACLI is closely watching discussions on asset adequacy testing guidelines. Haughawout reported those guidelines have undergone significant revisions in the past year. “The guidelines have changed pretty significantly from when they were first introduced to where we are today, which is a position to finalize a disclosure-only approach,” she said.
The NAIC will also consider updates to its public adjuster model law, which Segura described as a positive step, “There’s significant need to bring clarity and openness to the interaction between consumers and public adjusters,” she said.
