On December 9, 2020, the full National Association of Insurance Commissioners (NAIC) adopted:
This establishes a filing requirement for insurance groups for the purposes of evaluating solvency at the group level, since current insurance capital requirements are focused exclusively at the insurance entity level. State legislatures and insurance departments can now begin to adopt the holding company system revisions; the goal of the NAIC is to have the GCC fully in place by year-end 2022. The GCC does not have specific regulatory actions at this point in time but will instead be a regulatory tool to monitor overall solvency. It is expected to be used in conjunction with other reporting requirements created by the Holding Company Act and Own Risk Solvency Assessment Model Act. An NAIC drafting group consisting of regulators and industry representatives will begin work in early 2021 to develop guidance for the Financial Analysis Handbook, which will assist insurance departments in the review of the GCC results insurers submit.
GCC will leverage NAIC RBC requirements at the legal entity level and existing requirements from banks and other jurisdictions. The incremental components are:
Sensitivities will need to be provided for:
All insurance holding company groups in the US will be expected to file an initial GCC with their lead state regulators on a confidential basis. After the initial filing, the lead state commissioner can exempt holding company groups meeting specific criteria, including having group premiums of less than $1 billion. Limited insurance holding company systems will be exempt from filing the group capital calculation, primarily if they are subject to a group capital calculation by either the Federal Reserve Board or a reciprocal jurisdiction.
Get familiar with the NAIC GCC template and instructions, determine results using current data, socialize with management and begin preparations to discuss with your lead regulator before the effective date.