NAIC January 2021 Newsletter

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The National Association of Insurance Commissioners was active in the last quarter of 2020, continuing to address the many regulatory issues arising from the pandemic and other high priority projects. This newsletter contains information on activities that occurred in meetings since September 2020, with a focus on the virtual Fall National Meeting and subsequent conference calls through January 22, 2021.

Highlights include

  • The NAIC’s Center for Insurance Policy and Research held a special session on pandemic business interruption insurance and the need for the Federal government to provide a backstop for industry for this type of coverage.
  • The Group Capital Calculation Working Group completed its work on the GCC template, instructions and confidentiality provisions and adopted the final package with a proposed year-end 2022 implementation.
  • The Insolvency and Technology Task Force adopted revisions to the Unfair Trade Practices Act to provide guidance on permitted rebates to customers.
  • The Statutory Accounting Principles Working Group adopted new guidance on filing credit tenant loans with the SVO; the regulators also exposed for comment a proposal to extend the effective date of two Interpretations (INT 20-03 and INT 20-07) that provide COVID-related accounting relief. At the strong recommendation of industry, the working group set aside its first draft of an issue paper that would comprehensively revise SSAP 43R on loan-backed securities and formed a subgroup to draft a “principles-based definition of a Schedule D-1 bond.”
  • The Life RBC Working Group adopted a revision to the 2020 NOI calculation for commercial mortgage RBC and reaffirmed its commitment to adopt factors for the 20 bond designation categories for 2021 RBC filings. The Catastrophe Risk Subgroup approved a project to develop a risk charge for wildfire peril. The Health RBC Working Group adopted guidance for Exhibit 3A of the annual statement to improve the data quality of healthcare receivables.
  • The VOS Task Force adopted guidance for year-end 202o for financially modeled “zero loss” securities and continued their discussion of a long-term solution for nonconforming credit tenant loans.
  • The Blanks Working Group exposed for comment a new Part 3 to Schedule Y to require additional disclosure of related parties and three proposals to gather additional healthcare data from Life, P/C and Health entities.
  • The Financial Stability Task Force adopted revisions to the Holding Company Model Act to provide the legislative authority for the filing of the NAIC Liquidity Stress Test Framework by life and annuities companies meeting the defined scope criteria.
  • The Life Actuarial Task Force adopted a revised minimum nonforfeiture rate of 0.15%, which amends the NAIC model Standard Nonforfeiture Law for Individual Deferred Annuities.

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Jean Connolly

Managing Director, National Professional Services Group, PwC US

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