Regulatory Update: NAIC Fall 2021 National Meeting
The NAIC took several actions during the Fall Meeting with respect to investment monitoring, which include (a) proposed evaluation of the rating process for privately issued securities in 2022, (b) adoption of an amendment to the Purposes and Procedures Manual of the NAIC Investment Analysis Office (P&P Manual) to remove residual tranches from receiving an NAIC designation, (c) exposure of an amendment to the P&P Manual to update the definition of principal protected securities (PPS), with comments due by February 11, 2022, and (d) formation of a new Risk Based Capital (RBC) Investment Risk and Evaluation (E) Working Group, each as further described below.
2. NAIC Continues Efforts to Address Long-Term Care Insurance Issues
The Long-Term Care Insurance (EX) Task Force (LTCI Task Force) adopted the Long-Term Care Insurance Multistate Rate Review Framework (LTCI MSA Framework) as well as a checklist for premium increase communications. In addition, the Long-Term Care Insurance Model Update (B) Subgroup (LTCI Model Update Subgroup) continued its review of the Long-Term Care Insurance Model Act (Model 640) and Long-Term Care Insurance Model Regulation (Model 641) to determine whether the models remain compatible with the evolving delivery of long-term care services in the changing LTCI marketplace.
3. NAIC Designates the Macroprudential (E) Working Group to Oversee Regulatory Review of Considerations Relating to Private Equity Ownership of Insurers Within the NAIC
At the Fall Meeting, the Financial Stability (E) Task Force exposed a draft list of “Regulatory Considerations Applicable (But Not Exclusive) to Private Equity (PE) Owned Insurers” (the List of PE Considerations) for a comment period ending January 18, 2022, and confirmed that the Macroprudential (E) Working Group will serve as the coordinator of considerations related to PE owners of insurers to streamline regulatory review of such considerations within the NAIC.
4. NAIC Evaluates the Applicability of Nonforfeiture Benefits to Index-Linked Variable Annuities
The Index-Linked Variable Annuity (A) Subgroup (ILVA Subgroup) exposed for comment a new Actuarial Guideline (Actuarial Guideline ILVA) to prescribe conditions under which index-linked variable annuities can be considered variable annuities exempt from the scope of the Standard Nonforfeiture Law for Individual Deferred Annuities (Model 805).
5. NAIC Considers Comments Received on the Restructuring Mechanisms White Paper
The Restructuring Mechanisms (E) Working Group met in December to discuss comments received on the draft Restructuring Mechanisms white paper (White Paper), which was exposed for comment in October.
6. NAIC Considers Revisions to Statements of Statutory Accounting Principles
The NAIC revised the “substantive” and “nonsubstantive” terminology used to classify modifications to the statements of statutory accounting principles (SSAPs) and exposed for comment revisions to certain SSAPs to clarify the identification and reporting requirements for affiliated transactions and to incorporate new disclosures to identify investments that involve related parties.
7. NAIC Continues Implementation of 2019 Revisions to the Credit for Reinsurance Model Law and Regulation Ahead of Upcoming Deadlines
The NAIC continues to move forward on its implementation of aspects of the 2019 revisions to the Credit for Reinsurance Model Law and Regulation (together, the Revised CFR Model Laws).
8. Privacy Protections (D) Working Group Finalizes Report on Consumer Data Privacy Protections
The Privacy Protections (D) Working Group finalized its Report on Consumer Data Privacy Protections, which the Market Regulation and Consumer Affairs (D) Committee received at the Fall Meeting. The report was intended to provide recommendations with respect to the minimum consumer privacy protections that are appropriate for the business of insurance and to review the consumer privacy protections that already exist under applicable state and federal laws.
9. NAIC Forms New Innovation, Cybersecurity and Technology (H) Committee
The NAIC approved the establishment of a new Innovation, Cybersecurity and Technology (H) Committee ((H) Committee) to address the insurance implications of cybersecurity and emerging technologies, including big data, artificial intelligence and e-commerce. The (H) Committee is the first new letter committee to be formed since 2004 and, among other matters, will assume the activities of the Innovation and Technology (EX) Task Force, which held its final meeting at the Fall Meeting.
10. NAIC Adopts Exposure of the 2020 Revisions to the Insurance Holding Company System Regulatory Act and Regulation to Add the Group Capital Calculation and Liquidity Stress Test as Updates to the Accreditation Standards
At the Fall Meeting, the NAIC Executive (EX) Committee and Plenary adopted for exposure the 2020 revisions to Model 440 and Model 450 as an update to the Financial Regulation Standards (Accreditation Standards) for a one-year period ending December 31, 2022.
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