The National Association of Insurance Commissioners (the “NAIC”) will hold its 2024 Spring National Meeting (the “Spring National Meeting”) from March 15 to March 18, 2024. This meeting will be in a hybrid format, with meetings taking place virtually and in person in Phoenix, Arizona. Willkie attorneys will attend the Spring National Meeting to follow the key topics listed below, among others. A link to the full agenda for this meeting is available here. Please contact any of the attorneys listed below if you would like to discuss these or other topics before or after the Spring National Meeting.
- The Financial Condition (E) Committee will
continue its discussion of the Committee's previously exposed
Framework for Regulation of Insurer Investments – A
Holistic Review (the “Insurer Investment Framework”).
The primary objective of the Insurer Investment Framework is to
highlight areas where the insurance regulatory framework could be
enhanced in order to strengthen oversight of insurers'
investments in complex assets, taking into account feedback on the
NAIC's current workstreams related to insurer investments and
the limited resources of state regulators. The (E) Committee
received a number of oral comments on the Insurer Investment
Framework at the 2023 Fall National Meeting and is expected to
address specific comments at the Spring National Meeting. In
addition, below are the expected activities of its working groups
and task forces at the Spring National Meeting:
- The Statutory Accounting Principles (E) Working Group
(SAPWG) will hear comments on previously exposed items, as
well as items from its maintenance agenda. SAPWG is expected to
continue discussing proposed revisions to SSAP No. 21R—Other
Admitted Assets, the most recent draft of which was exposed at a
February 20, 2024 SAPWG meeting for a shortened comment period
ending March 7, 2024. These revisions, which reflect input received
from interested parties since their initial exposure at the 2023
Fall National Meeting, aim to provide guidance for debt
securities that do not qualify as bonds and to detail accounting
practices for residual tranches, as well as to reflect recent
changes to SSAP No. 48—Joint Ventures, Partnerships and
Limited Liability Companies on the definition of residual
tranches. Additionally, SAPWG will receive an update from the
Interest Maintenance Reserve (“IMR”) Ad Hoc Subgroup on
its meetings since forming in October 2023. Further discussion of
the IMR topic is anticipated beyond the Spring National Meeting, as
information on reported 2023 year-end IMR becomes available and
regulators are able to assess the impact of INT 23-01T (which
provided a limited-time, optional statutory accounting
interpretation allowing insurers to admit a net negative IMR
balance under certain circumstances).
- The Valuation of Securities (E) Task Force
(VOSTF) will continue discussion of comments to and
consider adoption of proposed amendments to the Purposes and
Procedures Manual of the NAIC Investment Analysis Office
(“P&P Manual”) previously discussed at the
NAIC's 2023 Fall National Meeting, including revised updates
to the definition of an NAIC Designation; revisions to the proposed
procedure authorizing the NAIC Securities Valuation Office's
(“SVO”) discretion over NAIC designations assigned
through the filing exemption (FE) process; and the addition of a
practical expedient to determine the issue date for private letter
rating filing. In new matters, VOSTF will consider exposure of a
proposed amendment to the P&P Manual to update its references
to the Statements of Statutory Accounting Principles in relation to
subsidiary, controlled and affiliated, and related-party bond or
preferred stock investments. VOSTF will also hear reports on the
annual year-end carryover filings from the SVO and on the proposed
collateralized loan obligation (“CLO”) modeling
methodology from the CLO Ad Hoc Working Group.
- The Statutory Accounting Principles (E) Working Group
(SAPWG) will hear comments on previously exposed items, as
well as items from its maintenance agenda. SAPWG is expected to
continue discussing proposed revisions to SSAP No. 21R—Other
Admitted Assets, the most recent draft of which was exposed at a
February 20, 2024 SAPWG meeting for a shortened comment period
ending March 7, 2024. These revisions, which reflect input received
from interested parties since their initial exposure at the 2023
Fall National Meeting, aim to provide guidance for debt
securities that do not qualify as bonds and to detail accounting
practices for residual tranches, as well as to reflect recent
changes to SSAP No. 48—Joint Ventures, Partnerships and
Limited Liability Companies on the definition of residual
tranches. Additionally, SAPWG will receive an update from the
Interest Maintenance Reserve (“IMR”) Ad Hoc Subgroup on
its meetings since forming in October 2023. Further discussion of
the IMR topic is anticipated beyond the Spring National Meeting, as
information on reported 2023 year-end IMR becomes available and
regulators are able to assess the impact of INT 23-01T (which
provided a limited-time, optional statutory accounting
interpretation allowing insurers to admit a net negative IMR
balance under certain circumstances).
- The Innovation, Cybersecurity, and Technology (H)
Committee will receive updates from its working groups and
receive presentations on artificial intelligence developments and
trends. In addition, its working groups and task forces plan to
discuss the following:
- The Big Data and Artificial Intelligence (H) Working
Group will discuss its project plans for 2024, will hear a
presentation from the American Academy of Actuaries and the Society
of Actuaries related to Big Data, AI, Fairness, Bias and Governance
and will receive an update on international developments on
artificial intelligence and machine learning in insurance.
- The Cybersecurity (H) Working Group will
consider adoption of the Cybersecurity Event Response Plan (CERP)
and discuss the work plan for discussion on cybersecurity and cyber
insurance. It will also receive a presentation from the American
Academy of Actuaries on resources the Academy provides in regard to
the actuarial aspects of cyber risks and a presentation from
CyberAcuView, which is an industry-supported entity that helps the
industry with cyber risk mitigation and resilience.
- The Third-Party Data and Models (H) Task Force
will hold its first public meeting and will discuss its 2024
charges and work plan.
- The Big Data and Artificial Intelligence (H) Working
Group will discuss its project plans for 2024, will hear a
presentation from the American Academy of Actuaries and the Society
of Actuaries related to Big Data, AI, Fairness, Bias and Governance
and will receive an update on international developments on
artificial intelligence and machine learning in insurance.
- The Executive (EX) Committee will receive the
2023 Annual Report of NAIC Designation Program Advisory Board
Activities, as well as reports on the New Avenues to Insurance
Careers (N.A.I.C.) Foundation and on NAIC models currently under
development. During the joint meeting of the Executive (EX)
Committee and Plenary, NAIC Members will consider adoption of the
reports of the NAIC's eight standing committees and will
receive progress reports on state implementation of recently
adopted NAIC model laws and regulations (e.g., the Pet Insurance
Model Act). In addition, the Climate and Resiliency (EX)
Task Force will hear a presentation on climate resilience
and receive an update on federal and international climate
initiatives and the Special (EX) Committee on Race and
Insurance will receive updates on the progress of its
workstreams and the Member Diversity Leadership Forum.
- The Property and Casualty Insurance (C)
Committee will hear presentations on the use of consumer
information in homeowners insurance and on parametric insurance
products, as well as receiving an update on the state regulator
data call regarding homeowners insurance. In addition:
- The Surplus Lines (C) Task Force will continue
discussion of issues raised by the current Uniform Certificate of
Authority Application's Uniform Consent to Service of
Process (“Form 12”) in light of the United States
Supreme Court's decision in Mallory v. Southern Railway
Co., 600 U.S. 122 (2023). Interested parties have raised
concerns that broad language contained in Form 12, which was
drafted for use by admitted carriers, could subject surplus lines
issuers executing the form to a state's general jurisdiction
under Mallory. At the 2023 Fall National Meeting, the
Surplus Lines (C) Task Force directed the formation of a drafting
group to review and consider relevant language within the
Nonadmitted Insurance Model Act (#870) and the
Unauthorized Insurers Process Act (#850), as well as
potentially drafting a new service of process form for use by
surplus lines insurers. We anticipate that the drafting group will
provide updates on these workstreams.
- The Surplus Lines (C) Task Force will continue
discussion of issues raised by the current Uniform Certificate of
Authority Application's Uniform Consent to Service of
Process (“Form 12”) in light of the United States
Supreme Court's decision in Mallory v. Southern Railway
Co., 600 U.S. 122 (2023). Interested parties have raised
concerns that broad language contained in Form 12, which was
drafted for use by admitted carriers, could subject surplus lines
issuers executing the form to a state's general jurisdiction
under Mallory. At the 2023 Fall National Meeting, the
Surplus Lines (C) Task Force directed the formation of a drafting
group to review and consider relevant language within the
Nonadmitted Insurance Model Act (#870) and the
Unauthorized Insurers Process Act (#850), as well as
potentially drafting a new service of process form for use by
surplus lines insurers. We anticipate that the drafting group will
provide updates on these workstreams.
- The Interstate Insurance Product Regulation
Commission and the Management Committee
will meet in joint session to hold a public hearing on the proposed
Standards for Individual Deferred Index Linked Variable Annuity
Contracts (Commonly Marketed as Registered Index Linked
Annuities) and amendments to the Additional Standards for
Market Value Adjustment Feature Provided through a Separate
Account, as well as discussing priorities, objectives, and
action items for the next three years.
- The Financial Regulation Standards And Accreditation (F) Committee will discuss revisions adopted in 2023 to NAIC publications referenced in the NAIC accreditation standards.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
