Several of the groups meeting this month were gathering for the first time this year and had new chairs at the helm. As is the usual course of business, some groups did not physically meet at the NAIC National Meeting in Indianapolis this month but instead met just prior to or just after that meeting. Either way, it was a month full of activity.
Reinsurance Task Force – March 4, 2025
The majority of this meeting was spent in a discussion of the asset adequacy testing (AAT) project of the Life Actuarial Task Force (LATF). Upon completion, and as it is now drafted, cash flow testing would be required for some life and annuity reinsurance transactions. The regulatory focus of the project is gaining insight into reserve adequacy when business is ceded. There would be particular focus on U.S. policyholders. Industry stakeholders were given an opportunity to express their opinions. The report of the Reinsurance Financial Analysis Working Group was adopted. The Mutual Recognition of Jurisdictions Working Group provided a summary of its activities, which indicated no activity had occurred since the last Task Force meeting. NAIC staff provided information on ongoing projects happening in other NAIC groups that may affect reinsurance. Included were projects by the Macroprudential Working Group, the Valuation Analysis Working Group, the Blanks Working Group, and the Statutory Accounting Principles Working Group (SAPWG). The final topic of the meeting focused on a question regarding language used in Appendix A-791 of the Accounting Practices and Procedures Manual. Two different interpretations were discussed, with the chair asking for input regarding those interpretations.
Blanks Working Group (BWG) – March 6, 2025; March 24, 2025 via email
A new chair led this meeting where most of the adopted and exposed proposals originated from SAPWG. Although most of the SAPWG reporting proposals were derived from the bond project, a few of the proposals were outside of that realm. After all, SAPWG has more time on its hands now with the completion of its bond project.
| Reference # | Subject | Disposition |
|---|---|---|
| 2024-13 | Editorial reporting changes related to the Bond Project. | Adopted, effective with the 2025 Annual Statement. |
As often happens with any major change in statement reporting, when regulators and industry start utilizing those changes, overlooked problems crop up. They are usually minor in nature and can easily be fixed through “editorial changes.” That is the case with this proposal. Several minor issues have been found, and rather than a separate proposal for each of the items, they were consolidated into one proposal. Since it is still early in the year, any changes to the 2025 Annual Statement resulting from the adoption of this proposal will be reflected in the official version of the statement blanks and instructions issued later this year.
| Reference # | Subject | Disposition |
|---|---|---|
| 2024-14 | Updates investment reporting category “Bonds Issued by Funds Representing Operating Entities” in various investment schedules. | Adopted, effective with the 2025 Annual Statement. |
The NAIC’s bond project had originally resulted in an investment reporting category, “Bonds Issued from SEC-Registered Business Development Corps., Closed End Funds & REITs.” But the title and corresponding definition created some reporting issues for industry. Last month SAPWG updated that reporting category and its definition.
| Reference # | Subject | Disposition |
|---|---|---|
| 2024-15 | Removes the Affordable Care Act disclosure for transitional reinsurance and risk corridors program from Supplemental Health Care Exhibit (SHCE) for all statement types. | Adopted, effective with the 2025 Annual Statement. |
| 2024-16 | Deletes the quarterly investment interrogatory regarding mortgages and real estate held as short-term investments in all statements. | Adopted, effective first quarter 2026. |
Remember, under the new guidelines mortgages and real estate are no longer allowed to be classified as cash equivalent or short-term investments.
| Reference # | Subject | Disposition |
|---|---|---|
| 2024-17 | Adds a line for pet insurance to the Market Conduct Annual Statement Premium Exhibit for all statements. | Adopted, effective with the 2025 Annual Statement. |
| 2024-18 | A new footnote reports the amount of premium deficiency reserves included in Part 2 of the Supplemental Health Care Exhibit in all statements. | Adopted, effective with the 2025 Annual Statement. |
| 2024-19 | Increases collateral loan reporting categories in Schedule BA for all statements and the Asset Valuation Reserve (AVR) for the Life/Fraternal statement. | Re-exposed through April 29, 2025. |
| 2024-20 | Requires contact information for the company guaranty association assessment contact on the jurat page for all statements; electronic reporting only. | Adopted, effective with the 2025 Annual Statement. |
| 2024-21 | Updates instructions to Schedule D – Parts 4 and 5 as to what should be included, in particular the sale of a security reacquired with different terms, for all statements. | Adopted, effective with the 2025 Annual Statement. |
| 2024-22 | Clarifies Schedule BA instruction definitions of surplus debentures and capital notes for all statements. | Adopted, effective with the 2025 Annual Statement. |
Again, a reminder that both capital notes and surplus debentures must now be reported on Schedule BA and not Schedule D.
The Working Group then exposed the following items for comment. The proposals will be considered for action at BWG’s upcoming meeting scheduled for May 29. If adopted, all currently indicate implementation with the 2025 Annual Statement.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-01 | Changes to Note #8 would include a disclosure indicating where the cash flows of derivatives are reported in the cash flow statement and to Note #11 to provide information for unused commitments and lines of credit for all statement types. | Exposed for comment through April 29, 2025. |
| 2025-02 | Deletes previous Note #9B(2) to reflect changes in current tax law for all statement types. | Exposed through April 29, 2025. |
| 2025-03 | Modifies the Life/Fraternal state page opening up the reporting section for A&H claims information (currently xxx’d out) and adds a new footnote disclosing A&H direct premiums earned. | Exposed through April 29, 2025. |
| 2025-04 | Proposes a new Note #28 section reporting information regarding the new Medicare Part D Prescription Payment Plans for all statement types. | Exposed through April 29, 2025. |
| 2025-05 | For the Life/Fraternal statement only, a new part to Schedule S would report reinsurance agreements with funds withheld (FWH) and modified coinsurance (MODCO). | Exposed through April 29, 2025. |
Originally this proposal would have added the same type of reporting to the reinsurance schedules in the Property/Casualty and Health statements, but the proposal was revised to apply only to the Life/Fraternal statement.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-06 | Recommends changes to instructions indicating which restricted assets should be included in Note #5L for all statement types. | Exposed through April 29, 2025. |
The Working Group officially received a report from SAPWG regarding the actions to be taken by insurers for inactive Lloyds syndicates at year-end 2024. The memo had already been posted to the BWG website for year-end but needed to be received as part of NAIC procedures.
The longest discussion of the meeting concerned an item that was added to the editorial list just a few days before the meeting. Revisions to Note to Financials #7C (Note) indicate that only interest income is to be included in the disclosure and then provides a crosscheck back to the reporting investment income due and accrued reported on the Asset page. The crosscheck is not new; however, previously the amounts to be recorded in the Note were to include all investment income due and accrued, not just interest income. Industry questioned this instructional change. After some discussion, it was decided to proceed with adopting the editorial changes including the Note #7C correction, but NAIC staff will review this particular item and may readdress it at the BWG meeting in May.
During the NAIC National Meeting, BWG released additional proposals for comment via email. These exposures are the result of actions taken by SAPWG.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-07 | Editorial revisions for Schedule P for the Property/Casualty statement submitted by the Casualty Actuarial & Statistical Task Force. | Exposed for comment through April 29, 2025. |
| 2025-08 | Removes General Interrogatory #14 (stockholder dividends) from the Life/Fraternal statement. | Exposed for comment through April 29, 2025. |
| 2025-09 | Updates Life/Fraternal Note to Financial #35 for separate accounts transfers. | Exposed for comment through April 29, 2025. |
| 2025-10 | Modifies Note to Financial #5L disclosing restricted assets for all statement types. | Exposed for comment through April 29, 2025. |
| 2025-11 | Removes Capital Structure Code column from Schedule D – Part 1 for all statement types. | Exposed for comment through April 29, 2025. |
| 2025-12 | Deletes “Line 8 – Unrated Multi-Class Securities Acquired by Conversion” from the AVR in the Life/Fraternal statements. | Exposed for comment through April 29, 2025. |
Despite what the proposal states, the line is not being deleted. Instead, it will be left in, but the description will be changed to “intentionally left blank.” This approach alleviates the need to renumber the following lines.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-13 | Amends Notes to Financial #13K regarding reporting of capital notes for all statement types. | Exposed for comment through April 29, 2025. |
| 2025-14 | Adds reporting for Medicare Part D Prescription Drug Plan for all statements types in part. | Exposed for comment through April 29, 2025. |
Although a proposal adding Medicare Part D Prescription Drug Plans to Note #28 already exists (2025-04 above), this proposal has instructional revisions for reporting the drug plans as healthcare receivables on the Assets page and the Supplemental Health Care Exhibit for all statements; Exhibits 3 and 3A in the Health statement and the Health Supplement of the Life/Fraternal statement; the Statement of Revenue and Expenses and the Analysis of Operations by Line of Business in the Health Statement; the Analysis of Operations By Lines of Business – Accident and Health in the Life/Fraternal statement; and the Analysis of Operations by Lines of Business in the Health Supplement of the Life/Fraternal statement. Similar instructional changes are made to the quarterly statements where needed.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-15 | Changes Note to Financial #8 for derivatives. | Exposed for comment through April 29, 2025. |
BWG will address these additional reporting exposures at its May 2025 meeting.
Statutory Accounting Principles Working Group (SAPWG) – via email March 11, 2025
SAPWG announced the As of March 2025 Accounting Practices and Procedures Manual is available as a complimentary download. The PDF file is available through the NAIC Resource Center.
Risk-Based Capital (RBC) Model Governance Task Force – March 17, 2025
This was the first public meeting of the new task force. The first order of business was the adoption of its 2025 charges. Those are:
- Develop principles for the RBC framework to promote consistency of future RBC adjustments.
- Complete a gap analysis and consistency assessment with the goal of identifying formula gaps and establishing a plan for addressing them.
- Supervise the development of an education and public messaging campaign stressing the importance to state-based insurance regulation.
- Oversee coordination among all of the NAIC committees/task forces, etc., related to RBC implementation/revision.
- Devise a process to analyze retrospective and future RBC adjustments, ensuring responsiveness to emerging risks and market trends.
The meeting ended with a short declaration indicating that the Task Force’s next steps will be discussed at the upcoming NAIC Spring National Meeting.
The NAIC Spring National Meeting
NAIC activity then moved to the Spring National Meeting, which was held in Indianapolis. The Meeting format had recently been reduced to a shorter time frame, which often results in back-to-back meetings for some.
Risk-Based Capital (RBC) Investment Risk and Evaluation Working Group – March 24, 2025
The Working Group heard an update from the American Academy of Actuaries (Academy) on its structured securities RBC capital project, a project that began in 2022. Included was the status of the different parts of the project. Next the group reviewed comments received on the exposure of the American Council of Life Insurers’ RBC principles for bond fund presentation. The comments were all in agreement with the overall project; however, all also were in favor of expanding the scope of the project to the Property/Casualty and Health RBC formulas. Expansion to the other RBC formulas would result in the same treatment of the bond funds available to the Life companies. The next step for the project is the drafting of needed format and/or instructional changes by NAIC staff. The Working Group then received updates from the Valuation of Securities Task Force (VOSTF) and the Statutory Accounting Principles Working Group (SAPWG) on working being done that might need to be reviewed by the group.
Life Risk-Based Capital (RBC) Working Group – March 24, 2025
The Working Group heard updates from the Generator of Economic Scenarios (GOES) Subgroup, the Longevity Risk Subgroup, and the Variable Annuities Capital and Reserve Subgroup. A referral from the GOES subgroup was exposed for a 30-day comment period ending April 23, 2025. The referral outlines actions the Working Group should take to implement the new economic scenario generator for year-end 2026 reporting. Those actions are:
- Changes to the Life RBC format and instructions.
- Coordinate with the Variable Annuities Capital and Reserve Subgroup on recommended changes to the C-3 Phase II calculation.
- Consider changes to the required number of scenarios for the C-3 Phase I calculation.
- Consider changes to the capital metric for the C-3 Phase I calculation.
The group heard a presentation from the Academy on its C-3 project. According to the Academy, the goal of this project is “to harmonize C-3 Phase 1 and C-3 Phase 2 methodologies.” Because of the number of changes to current methodologies, they are recommending the Working Group consider a phased-in approach, with some changes for year-end 2026. The following was exposed for comment.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-04-L | Changes presentation format to page LR008 -Other Long-Term Assets. | Exposed for comment ending April 23, 2025. |
This proposal replaces 2024-07-L, which had previously been deferred. It reorganizes the reporting of Schedule BA assets of the same risk components to facilitate correct MODCO/FWH reinsurance agreement adjustments.
The Working Group will next meet on May 1 to consider action on several items that have been exposed for comment.
Health Risk-Based Capital (RBC) Working Group – Monday 24, 2025
The following were exposed for comment.
| Reference # | Subject | Disposition |
|---|---|---|
| INT24-01 | Referral from SAPWG regarding the capital notes. | Exposed for comment through April 23, 2025. |
The referral covered 2024 changes to the reporting of capital notes within the Annual Statement which, in turn, will affect a company’s RBC results. Under the recently completed bond project, capital notes can no longer be reported as bonds in Schedule D but instead must be reported in Schedule BA. Therefore, capital notes will be subject to different RBC factors for both the Health and Property/Casualty formulas. SAPWG suggested the Working Group may want to revisit the treatment of capital notes in the RBC formula and consider allowing capital notes and surplus notes more granular treatment as found in the Life RBC.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-03-CA | Annual update of the underwriting factors for comprehensive medical, Medicare supplement, and dental and vision for the investment income adjustment. | Exposed for comment through April 23, 2025. |
Upon adoption by the Health RBC Working Group, the above proposal will be sent to the Capital Adequacy Task Force for processing, since the new factors will need to be incorporated into the Life and Property/Casualty RBC formulas.
An additional SAPWG referral called attention to new accounting and statement reporting for Medicare Part D Prescription Payment Plans.
The Academy then provided a presentation on its work on the H-2 underwriting risk component and managed care credit calculation. The Academy focused on reviewing H-2 factors, developing factors on more granular product level, studying relevant block sizes, possible adjustments to reflect common contracting approaches and the analyzing of long-term care insurance. The presentation was exposed for comment with the component period ending April 23, 2025. The Academy and NAIC will now be working on specific formula format changes and instructions, as well as the creation of a new Exhibit 7 in the Health annual statement.
Joint Meeting of the Catastrophe Risk Subgroup & Property and Casualty Risk-Based Capital (RBC) Working Group – March 24, 2025
The following was released for comment.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-05-CR | Disclosure for climate condition catastrophe exposure instructions. | Exposed for comment through April 23, 2025. |
The Wildfire Model Review Ad Hoc Group provided an update regarding the CoreLogic Wildfire Model review. With the completion of this review, the group is now ready to begin impact analysis via all four reviewed models. Impact analysis is scheduled to start in April; however, input is needed from regulators on the event horizon to use. With that in mind, a report showing the effects of different event horizons was provided for review.
The Academy provided a presentation updating its current underwriting risks projects. The Academy has selected eight topics to prioritize for 2025, although the topics will be multi-year projects. Additionally, the Academy noted topics that are not currently prioritized but should be addressed in the future.
The Working Group chair reminded everyone that when the 2024 underwriting factors and investment income factors were updated, the 2025 factors also were adopted. The 2025 factors included in the adoption and, as such, are already in place.
The discussion then turned to a SAPWG referral on capital notes and non-bond debt securities. The referral had been previously exposed for comment, with no comment received. The Working Group will continue to discuss the handling of these investments within the RBC formula.
The meeting ended with a presentation entitled Insights into Catastrophe Trends: From the Actuaries Climate Index and the US Billion-Dollar Disasters. The presentation showed the frequency and loss severity of billion-dollar disasters since 1900. Covered were winter storms/freezing, wildfires/drought, tropical cyclones, and severe storms/floods.
Statutory Accounting Principles Working Group (SAPWG) – March 24, 2025
SAPWG took the following actions. Please note those items exposed for comment with a May 2, 2025, deadline are expected to be acted upon at SAPWG’s May 22, 2025, meeting because they involve items to be considered by BWG for 2025 reporting.
| Reference # | Subject | Disposition |
|---|---|---|
| 2023-14 | Memorandum recommending removal of hypothetical Interest Maintenance Reserve (IMR). | Exposed for comment through June 6, 2025. |
This is part of the continuing work of the IMR Ad Hoc Group. In its review process of reinsurance transactions flowing through the IMR, the group decided that the concept of hypothetical IMR is not well understood by insurers, regulators, or NAIC staff. They also concluded that those thought of as experts in statutory accounting and reinsurance did not realize that the concept of hypothetical IMR existed, or if they did know it existed, they were not able to explain what it was or how it should be used. The final conclusion? It should be eliminated.
| Reference # | Subject | Disposition |
|---|---|---|
| 2023-28 | Collateral loan reporting in statement Schedule BA and the Life AVR (no accounting changes). | Adopted, effective January 1, 2026. |
| 2024-03 | Clarification to SSAP No. 103 regarding securities lending, repurchase, and reverse repurchase agreements. | NAIC staff directed to develop revisions. |
| 2024-07 | Reporting FWH and MODCO assets. | Re-exposed for comment through May 2, 2025. |
If adopted, the above proposal would add a new part to Schedule S in the Life statement.
| Reference # | Subject | Disposition |
|---|---|---|
| 2024-15 | SSAP No. 86 possible guidance for certain non-accounting effective derivatives to defer gains and losses. | Directed NAIC staff to do further research. |
| 2024-20 | Revisions to Statement of Statutory Accounting Principles (SSAP) No. 1 and Notes to Financials (Note) #5L regarding MODCO and FWH restricted assets. | Adopted, effective December 31, 2025. |
| 2024-21 | SSAP No. 97 definition of investment subsidiary. | Deferred pending further research. |
The main focus here is subsidiary, controlled or affiliated (SCA) entities that hold assets on behalf of the reporting insurer. The work also could result in new investment schedules or expansions to existing investment schedules to detail the assets held by the investment subsidiary. Several questions came up during the meeting conversation, so the decision was made to defer the proposal for now.
| Reference # | Subject | Disposition |
|---|---|---|
| 2024-24 | Accounting guidance for Medicare Part D Prescription Payment Plans. | Adopted effective December 31, 2025. |
| 2024-04 | Revisions to SSAP No. 103 for conforming repurchase agreement assets. | NAIC staff directed to proceed with developing revisions. |
| 2024-07 | Adds a new part to the Life/Fraternal Statement Schedule S for the reporting of information on FWH/MODCO assets in reinsurance contracts (no accounting changes). | Exposed for comment through May 2, 2025. |
| 2024-15 | Revises SSAP No. 86 for certain non-accounting effective derivatives to defer realized gains/losses. | NAIC Staff directed to do more research. |
| 2025-01 | Amends SSAP No. 22 to clarify that sale leasebacks with restrictions on access to the cash proceeds do not qualify for sale-leaseback accounting but are to use the financing method for accounting. | Exposed for comment through June 6, 2025. |
| 2025-02 | Revisions to SSAP No. 15 from modified ASU 2024-04. | Exposed for comment through June 6, 2025. |
| 2025-03 | Revises definition of IMR. | Exposed for comment through June 6, 2025. |
| 2025-04 | Removes capital structure code column from both Sections of Schedule D – Part 1 (no accounting change). | Exposed for comment through May 2, 2025. |
| 2025-05 | Expands restricted asset reporting for MODCO/FWH reinsurance contracts and requires Note disclosure in both annual and quarterly statements. | Exposed for comment through May 2, 2025. |
| 2025-06 | Removal of a line from the AVR which under the new bond definition is no longer valid. | Exposed for comment through May 2, 2025. |
| 2025-07 | Removes the general interrogatory on dividends from the Life/Fraternal statement (no accounting changes). | Exposed for comment through May 2, 2025. |
| 2025-08 | Amends SSAP No. 84 to add disclosures for Medicare Part D prescription payment plan amounts. | Exposed for comment through May 2, 2025. |
| 2025-09 | Revisions to SSAP No. 51 reflecting new VM-22 statutory maximum valuation rates to income annuities reserve requirements. | Exposed for comment through June 6, 2025. |
| 2025-10 | Rejects ASU 2023-07, Improvements to Reportable Segment Disclosures as not applicable to statutory accounting. | Exposed for comment through June 6, 2025. |
| 2025-11 | Classifies ASU 2024-03, Disaggregation of Income Statement Expenses and ASU 2025-0, Clarifying the Effective Date of ASU 2024-03 as not applicable to statutory accounting. | Exposed for comment through June 6, 2025. |
| 2025-12EP | Adds Issue Papers as a Level 5 in the statutory hierarchy; updates reference to SEC rules and interpretations as authoritative US GAAP for SEC registrants. | Exposed for comment through June 6, 2025. |
SAPWG received an update on the work being done by the IMR Ad Hoc Group, which is currently focused on reinsurance transactions, reinvestment for sold fixed-income instruments where gains/losses are incorporated into IMR, and guidance on excess withdrawals.
Also received was a referral from the Life RBC Working Group requesting comments on a proposal from the American Council of Life Insurers (ACLI) to clarify the instructions for Life RBC page LR010 regarding SVO designated non-bond debt securities using the bond factors in the formula’s Asset Concentration.
Updates were provided on U.S. GAAP exposures and the activities of the International Association of Insurance Supervisors (IAIS).
The chair reminded attendees of an upcoming joint meeting with the Life Actuarial Task Force on April 10, 2025, and SAPWG’s next scheduled meeting on May 22 to finalize items for 2025 annual statement reporting prior to the Blanks Working Group meeting.
Capital Adequacy Task Force – March 25, 2025
The Task Force heard and adopted the reports of its various working groups. The group then took the following actions.
| Reference # | Subject | Disposition |
|---|---|---|
| 2024-25-CA | Conforms investment reporting categories in the Property/Casualty and Health formulas to the categories adopted through the completed bond project. (Life adopted separately.) | Re-exposed through April 24, 2025. |
| 2024-26-CA | Requires RBC reporting changes for the tax credit investments in the Property/Casualty and Health formulas. (Life adopted separately.) | Re-exposed through April 24, 2025. |
The above two items were re-exposed along with a comment letter from the ACLI. The ACLI letter was originally directed to the Life RBC Working Group when that group was considering the adoption of the above two items but is applicable for consideration in adopting the same changes to the Property/Casualty and Health RBC formulas.
| Reference # | Subject | Disposition |
|---|---|---|
| 2025-07-CA | Adds language in each of the formulas regarding the triggering of the trend test. | Exposed for comment through April 24, 2025. |
This proposal does not change the calculation of any of the RBC action levels or trend tests. Instructional clarifications indicate that triggering the trend test is considered as a separate action level and that if the reporting entity triggers the trend test, it automatically falls into the Company Action Level and is subject to all the corresponding follow-up actions.
| 2024-16-CA | Revises the language used in the formula Preamble. | Re-exposed for comment through May 9, 2025. |
Revising the RBC Preamble is the subject of this proposal, as well as the removal of the RBC results from the Five-Year Historical Data in the annual statements. Originally, revisions to the Preamble were to be addressed by an appointed subgroup but that did not happen, leaving revisions unaddressed. To move forward with the project the Task Force decided to re-expose the proposal for 45 days. Afterward the Task Force will meet, maybe privately at first, to compare notes/comments and move the proposal forward.
SAPWG provided an update on activities it is pursuing that might ultimately need to be considered for RBC.
(New) Aggregation Method Implementation Working Group – March 25, 2025
For those of you that are associated with internationally active insurance groups, the NAIC offers this new working group. With the formation of this Working Group, it became the only group directly reporting to the International Insurance Relations (G) Committee. According to the Working Group’s webpage, it has the following 2025 charges:
- Review group capital regulation of U.S. groups and its potential for comparable implementation of the Insurance Capital Standard (ICS). (The ICS is a global RBC standard developed by the IAIS aimed at creating a common language for supervisory discussions on group solvency and to enhance global convergence among group capital standards.)
- Coordinate the U.S. implementation of the ICS.
- Monitor any further ICS development by the IAIS.
- Report to and coordinate with the G Committee.
At this meeting, its first, the Working Group heard a presentation on the reason for its formation and future proposed work to be done to accomplish the above goals. It was made clear that the aggregation method will be used for U.S. implementation of the ICS through the group capital calculation. A timeline for deliverables was included in the presentation, with first results to be seen during the fourth quarter of 2025 and extending through 2027, with a parenthetical note indicating 2027 at the earlies for some items. As part of its work, the group will need to coordinate with various groups under the Financial Conditions Committee and the Group Capital Calculation Working Group.
Valuation of Securities Task Force (VOSTF) – March 25, 2025
During the meeting, the following revisions to the Purposes and Procedures Manual of the NAIC Investment Analysis Office were addressed.
| Subject | Disposition |
|---|---|
| Amendments would require the filing of private rating letter rationale reports within 90 days of affirmation, update, or change. | Exposed for comment through April 25, 2025. |
| Revisions would require that private rating letter rationale reports possess analytical substance. | Exposed for comment through April 25, 2025. |
NAIC staff provided a status report on 2024 private rating letter rationale reports filings. The report concentrated on the number of missing rationale reports from November 11, 2024, through March 3, 2025, when securities requiring but missing the rationale reports were removed from the NAIC’s database.
In addition, the Task Force heard a report on 2024 carry over filings. Interestingly, the report was used to indicate the need for additional Securities Valuation Office resources.
SAPWG provided an update on its recent activities concerning investments.
An update on the collateralized loan obligations (CLO) modeling project was provided. As a reminder, the CLO project has its own webpage (search for “CLO modeling webpage” on the NAIC website) providing meeting agendas as well as updated documents (scroll way down for the documents).
Accounting Practices and Procedures Task Force – March 25, 2025
The usual format of this meeting is to open, approve its previous meeting minutes, adopt the reports of its two working groups, ask if there are any other matters to be discussed, and then adjourn. Occasionally there will be a controversial issue that originated in one of the working groups but is reopened or continued by the Task Force. There were no controversial topics, so it was business as usual.
Executive Committee – March 25, 2025
The Committee adopted reports from the following groups that report directly to it.
- Climate and Resiliency Task Force
- Government Relations Leadership Council
- Special Committee on Race and Insurance Transition Plan
- Risk-Based Capital Model Governance Task Force
A report was given on the 2024 activity of the NAIC Designation Program. This is an educational program providing professional designation for insurance regulators.
A status report on model law development indicated that work on the Privacy of Consumer Financial and Health Information Regulation (#672) was continuing, while revisions to the Public Adjuster Licensing Model Act (#228) are on the agenda of the upcoming Executive/Plenary meeting. (Industry is not supporting Section 14 of the Model, which would limit the amount of compensation paid to adjusters.)
Oral reports were provided by the National Insurance Producer Registry and the Interstate Insurance Product Regulation Commission.
Risk-Based Capital (RBC) Model Governance Task Force – March 25, 2025
Despite the fact the Task Force had already adopted its 2025 goals (see discussion from March 17, 2025, above), comments received during the goals’ exposure period prior to adoption were reviewed and others also were given the opportunity to speak. The Task Force announced its next step is to hire a consultant. The chair also reminded attendees that its February memorandum contained some questions and asked that stakeholders provide responses to those questions to the Task Force. The group emphasized the need for it to get up to speed quickly.
This was the second public meeting of the Task Force. To some it is still not clear why the group was formed and why it will be hiring a consultant. In its first meeting, it cited promoting consistency of future RBC adjustments. This is already being done by both the existing RBC Working Groups and the Capital Adequacy Task Force. Also cited was the coordination among all of the NAIC committees/task forces related to RBC. This, too, is already being done. Another listing was analyzing retrospective and future RBC adjustments in response to emerging risks and market trends. Don’t the Working Groups, in conjunction with the Academy, already do this? The existing NAIC and Academy groups are comprised of experts in the related insurance areas (Life, Health, Property/Casualty). Will the consultant hired be an expert of all of the RBC formulas and the related industry segments? It will be interesting to watch what this group, in conjunction with the consultant, will be able to accomplish that existing groups couldn’t.
Big Data and Artificial Intelligence (AI) Working Group – March 25, 2025
An update was provided on the Health AI/machine learning (ML) survey conducted in 16 states and completed by active insurers. The Survey had several goals:
- Help regulators understand the current states of AI/ML use by comprehensive major medical and student health insurers.
- Gain insight into the role third parties play in the development and use of AI.
- Obtain an understanding of health insurers’ AI governance frameworks.
- Review alignment of health insurers’ AI governance frameworks with NAIC AI Principles and Model Bulletin.
The report on the survey results is expected to be published sometime in April 2025. Previously, similar surveys had been conducted with auto, home, and life insurers.
Another update was provided on the regulatory framework for the use of AI systems. This included a road map for safeguarding the responsible use of AI. Future discussions will include evaluation tools, including some type of a standardized self-assessment questionnaire to help determine how AI is used by insurance companies.
Innovation, Cybersecurity and Technology (H) Committee – March 26, 2025
After conducting its regular format of adopting reports of its reporting groups and adopting new charges, the Committee heard a presentation from Travelers on the responsible use of AI. The presentation covered various areas of consideration Travelers is using in its AI implementation. The meeting concluded with an update on federal activities related to AI, cybersecurity, and technology.
Forvis Mazars, AI, and the Insurance Industry
Since the NAIC adoption (and even before) of its Principle on AI and the AI Model Bulletin in 2023, the NAIC has been actively trying to determine how industry is incorporating AI into its systems. As things move forward, the above two groups anticipate evaluation of AI systems, gathering information about existing tools and resources available for regulating AI, assembling subject matter experts to develop new regulatory tools for states.
Recognizing the revolutionary importance of the implementation of AI in the insurance industry, Forvis Mazars will be posting a quarterly series of FORsights™ articles exploring the NAIC’s model bulletin on AI governance. These articles will cover governance, assessment, controls, and monitoring. Read the first article, NAIC Use of Artificial Intelligence: Governance, for details on governance.
Financial Condition (E) Committee – March 26, 2025
Like most of the NAIC’s “lettered” committees, the focus of its meetings is to oversee the work being done by the groups that report directly to it. This is usually done through the adoption or receiving of those groups’ meeting minutes. During this meeting, the Committee adopted the reports of six task forces, one working group, and two regulator-only sessions. Updates were received from four other groups. The Committee heard a status report on the Reinsurance Asset Adequacy Actuarial Guidance being drafted by the Life Actuarial Task Force.
VOSTF provided a report separately from its meeting minutes on privately rated securities missing rationale reports. This was the same report presented in its own meeting (see the VOSTF write-up above).
The RBC Investment Risk and Evaluation Working summarized its current status, including a discussion on the CLO working being done by both the Academy and the modeling by the NAIC’s Structured Securities Group.
Joint Meeting of the Executive Committee and Plenary – March 26, 2025
This is always the last session of the National Meeting and usually not very exciting; actually kind of anticlimactic. This time was no exception. As a matter of routine, the Executive Committee report was received and the minutes from the 2024 Fall National Meeting of the various other committees, subcommittees and task forces were adopted by consent. The same groups’ minutes from this National Meeting were received. (These are considered drafts and will be formally adopted at the next National Meeting.) The group adopted the Premium Increase Transparency Guidance and Amendments to the Public Adjuster Licensing Model Act (#228). The meeting ended with a status report on the state implementation of NAIC adopted model laws and regulations.
Life Actuarial Task Force (LATF) Update
For some time, LATF has been working on Valuation Manual revisions to address regulator concerns that life insurers may enter into reinsurance transactions that materially lower the amount of reserves and thereby facilitate release of reserves that prejudice the interests of their policyholders. The revisions that LATF have been working on would require asset adequacy testing (AAA) using cash flow testing to evaluate ceded reinsurance. The new requirements would apply to domestic life insurers only, with some insurers being scoped out if they do not meet certain criteria.
The proposed revisions have gone through several iterations and have been released for comment several times. Under the current proposal the AAA would be effective beginning December 31, 2025. The current version of the proposal can be found on LATF’s webpage, and is labeled as AGReAAT 032325 under the Exposure Draft tab. The comment deadline is April 24, 2025.
If you have any questions or need more information, please reach out to a professional at Forvis Mazars.