At the National Association of Insurance Commissioners (NAIC) Fall National Meeting, new updates and activities from various NAIC groups stepped up to the main stage.
Here are the headliners for life insurance and annuities companies:
- The show goes on for Valuation Manual (VM) 22 work as the Life Actuarial (A) Task Force (LATF) considered the following VM-22 projects:
- LATF heard a proposal that would enable insurers to establish reserves for pension risk transfer (PRT) annuities based on a calculation that employs the insurer’s own asset and reinvestment assumptions consistent with the insurer’s investment policy, subject to a guardrail. This proposal would modify VM-22 investment guardrails for group annuities supporting PRT business to better reflect actual investments. LATF exposed conceptual slides and consideration questions regarding this proposal and will continue to consider whether this proposal could be applied beyond PRT business.
- Discussions have been ongoing regarding the retrospective application of VM-22 for in-force contracts. At the meeting, LATF presented a list of discussion topics and a “menu of approaches” to VM-22 in-force application. Although LATF has not determined which approach will be used, these discussion topics and list of approaches will continue to set the stage for decisions on VM-22’s application to in-force contracts.
- LATF exposed a proposal to adopt a consistent reinvestment guardrail for each of VM-20, VM-21, and VM-22. LATF regulators noted that this proposal should be considered in light of impact testing on the proposed reinvestment guardrails, which will be provided by the American Council of Life Insurers.
- One of the meeting’s most talked-about acts, the Big Data and Artificial Intelligence (H) Working Group, drew a crowd to discuss edits on its Artificial Intelligence (AI) Systems Evaluation Tool, which would enable regulators to identify and assess AI-related market conduct and financial risks. During its session, the group’s work focused on revisions to the background, intent, and scope of the tool, as well as the tool’s Exhibit A, which is intended to obtain and quantify information pertaining to insurers’ use of AI systems. The group also outlined its plans to pilot the tool with several state insurance departments in 2026, although the structure of this pilot program has not yet been determined. Industry feedback on the tool suggests the pilot program may need further rehearsal, as a joint comment letter from several trade groups expressed that “the industry remains significantly concerned about the lack of detail and guidance around the proposed Pilot of the Tool.”
- The Statutory Accounting Principles (E) Working Group (SAPWG) had a full setlist of agenda items at the national meeting, including the following:
- SAPWG adopted new guidance that allows for qualifying statutory trust structures to hold and report residential mortgage loans (RMLs) on Schedule B as if the RMLs were held directly by the insurer itself. The new guidance also establishes new disclosures for these qualifying statutory trusts, including a description of the trusts, a summary of the assets and liabilities held within the trust, disclosure of any material litigation or regulator reviews, disclosure of financing transactions, and a summary of loans held in the trust disaggregated by loan standing.
- SAPWG also adopted revisions to incorporate new private security disclosures. The revisions incorporate a new reporting column to identify private placement securities by type in the investment schedules and an aggregate disclosure detailing key investment information by type of security. The new disclosures will be effective and required as of year-end 2026.
- The Risk-Based Capital (RBC) Model Governance (EX) Task Force hit a high note in adopting the Principles for RBC Requirements. The principles are intended to serve as guidance for governing the purpose and use of, as well as maintaining and prioritizing updates to, the RBC requirements. Notably, the RBC principles provide that, while RBC requirements are primarily used to facilitate regulatory action with respect to weakly capitalized companies, the requirements may also be used for other purposes, reflecting the trend of broader use of RBC information beyond the regulatory community. Insurers can stay tuned for further work on the RBC framework in 2026, as the Capital Adequacy Task Force and RBC Model Governance Task Force will continue work on updating and streamlining the RBC preamble in light of the adopted principles.
- This national meeting served as a farewell performance for the Valuation of Securities (E) Task Force, as effective January 1, 2026, the group will be broken up and replaced by the Invested Assets (E) Task Force, with three reporting working groups:
- Invested Assets (E) Working Group, focused primarily on portfolio level analysis.
- Investment Designation Analysis (E) Working Group, focused primarily on analysis of individual investments to appropriately assign their NAIC designations.
- Credit Rating Provider (E) Working Group, focused primarily on the administration of the Credit Rating
Provider Due Diligence Framework, which is currently under development.
Needless to say, true NAIC fans are breathless with anticipation to see which of these initiatives will be the
biggest hits in 2026!
