NAIC Fall 2020 Newsletter

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The National Association of Insurance Commissioners has been especially active in 2020 to address the many regulatory issues arising from the COVID-19 pandemic. This newsletter contains information on activities that occurred in meetings since January 2020, with a focus on the virtual Summer National Meeting and subsequent conference calls through September 30.

Highlights include

  • The NAIC established a Special Committee on Race and Insurance to address “racial inequality and promote diversity in the insurance industry.”
  • The Insolvency and Technology Task Force gave final approval to its Artificial Intelligence Guiding Principles document.
  • The Statutory Accounting Principles Working Group adopted seven new Interpretations to assist on COVID-19-related accounting issues. The working group exposed the first draft of an issue paper that is expected to comprehensively revise SSAP 43R on loan-backed securities and exposed guidance on accounting for credit tenant loans.
  • The Capital Adequacy Task Force adopted changes to the three RBC formulas to implement 20 NAIC bond rating classes for year-end 2020 (but without any factors assigned to the 20 designations). The Life RBC Working Group adopted its longevity risk proposal for certain annuity products for 2020 RBC; use of a zero-risk factor for 2020 will allow the NAIC to perform impact analysis. The Health RBC Working Group decided to defer implementation of its revised “health test” for determining which entities should file the health annual statement and instead will explore other options.
  • The VOS Task Force adopted a revised definition of principal protected notes and removed the filing exempt status for these investments and also adopted revised instructions for financially modeled RMBS and CMBS to map the price breakpoints to the 20 bond rating classes for RBC purposes.
  • The Group Capital Calculation Working Group made significant progress in 202o on completing its work on the calculation template, instructions and confidentiality provisions.
  • The Life Actuarial Task Force adopted AG 49-A, Application of the Life Illustrations Model Regulation to Policies with Index-based Interest on indexed universal life illustrations to increase consistency and transparency. The guidance is effective for policies issued on or after November 25, 2020. The task force also discussed the results of its YRT reinsurance reserve credit field test; the guidance may not in place for the 2021 Valuation Manual as originally hoped.
  • The International Insurance Committee discussed the results of the IMF’s FSAP review published in August, which concludes that the U.S. insurance regulatory system is in alignment with the Insurance Core Principles.
  • The Casualty Actuarial and Statistical Task Force adopted its white paper on best practices for the regulatory review of predictive models.

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Jean Connolly

Managing Director, National Professional Services Group, PwC US

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