NAIC 2025 Meeting Highlights Progress in Modernizing State-Based Insurance Regulation
At the NAIC 2025 Summer National Meeting in Minneapolis, NAIC President and North Dakota Insurance Commissioner Jon Godfread highlighted the progress and initiatives underway to strengthen and modernize state-based insurance regulation. Emphasizing the theme "Securing Tomorrow," the focus is on proactive risk management, regulatory modernization, and enhancing consumer protection through collaborative state efforts.
A major emphasis was placed on the Risk-Based Capital (RBC) Model Governance Task Force, tasked with updating governance to align with RBC's evolution from a simple solvency flag to a dynamic, year-round capital and risk management tool integral to company strategies and regulatory oversight. The initiative aims to establish clear, transparent principles to govern RBC, responding to increased market complexity and international coordination needs.
Commissioner Godfread discussed the significance of reinsurance as a critical component in managing market stability and insurer solvency amid growing catastrophe risks. Recent NAIC forums have examined offshore life reinsurance trends driven largely by federal tax policy, highlighting concerns over regulatory arbitrage and transparency. The NAIC is advancing stringent Asset Adequacy Testing (AAT) standards to ensure life insurers maintain asset-liability alignment under varied stress conditions.
On the property/casualty side, regulatory focus includes catastrophe modeling, market capacity, and the effects of tightening global reinsurance markets, aiming to enhance resilience and affordability. State-led programs addressing wildfire and disaster mitigation reflect efforts to reduce long-term costs and preserve market availability, with calls for increased federal support for these localized initiatives.
The NAIC continues to advocate for the primacy of state-based insurance regulation, warning against federal interference that may create regulatory confusion, specifically pointing to the Federal Insurance Office (FIO). The call includes eliminating FIO to clarify U.S. regulatory stance internationally and strengthen the recognized state-centric model.
Communication improvements aim to clarify the role and value of insurance regulation to consumers, media, and policymakers. Recent initiatives include adoption of an AI Model Bulletin by 24 states, balancing innovation oversight with consumer protection amid emerging technology adoption.
Challenges remain with recent federal budget decisions affecting health care affordability and reinsurance funding, underscoring the importance of state-level advocacy on mental health parity and Medicare Advantage marketing oversight.
The speech acknowledged a need to improve public perception and trust in insurance, urging industry and regulators to communicate transparently about insurance's critical role in economic stability and individual recovery. It emphasized that regulatory success often goes unseen but is pivotal to market stability and consumer confidence.
Global engagement through forums such as the International Insurance Forum in Washington, D.C., demonstrates U.S. leadership in addressing technological disruptions, capital modernization, and investment strategies, reinforcing the international stature of the U.S. insurance regulatory model.
Looking ahead, the NAIC aims to finalize RBC governance principles by the end of 2025, continue enhancing reinsurance oversight, and advocate for regulatory clarity and consumer protections to sustain market strength and adapt to evolving challenges.