NAIC Summer 2025 Meeting Advances Reinsurance, Investment, AI Oversight
The National Association of Insurance Commissioners (NAIC) held its Summer 2025 National Meeting from August 10-13, 2025, addressing key regulatory and compliance issues impacting the U.S. insurance industry. A significant highlight was the formal adoption of Actuarial Guideline 55 (AG 55), which stipulates enhanced asset adequacy testing requirements for life insurers engaging in long-duration, asset-intensive reinsurance transactions. This guideline aims to prevent regulatory arbitrage through offshore reinsurance and ensures transparency for reserves and assets backing ceded life insurance business.
NAIC’s renewed focus on offshore reinsurance risks was emphasized, reflecting growing scrutiny on asset movements into jurisdictions with varying regulatory oversight. The Reinsurance (E) Task Force continues to evaluate solvency risks and transparency gaps associated with offshore reinsurance, with plans for further education and regulatory tool development to assess these exposures.
The Macroprudential (E) Working Group examined insurers' use of funding-agreement-backed notes (FABN) and securities (FABS), identifying potential risks such as liquidity, credit, and reporting deficiencies. Regulatory bodies anticipate enhanced insurer disclosures in future filings to support aggregate risk assessment.
Revisions to Actuarial Guideline 49-A are underway to standardize disclosures for life insurance policies with index-based interest, addressing inconsistencies in historical performance illustrations. The Annuity Suitability (A) Working Group proposed safe harbor guidance to facilitate the implementation of updated suitability standards within annuity transactions.
The Health Insurance and Managed Care (B) Committee adopted updates to the long-term care insurance multistate rate review framework, streamlining rate review methodologies and adjusting cost-sharing factors to mitigate the impact of past rate increases on older policyholders.
A new Reciprocal Exchanges (E) Working Group was formed to amend regulatory standards ensuring attorney-in-fact fee structures charged to reciprocal exchanges are fair and reasonable, addressing rapid growth and increased premiums within this segment.
Investment monitoring activities saw significant developments: the Valuation of Securities (VOS) Task Force enhanced requirements for private rating letter rationale reports and postponed collateralized loan obligation (CLO) modeling implementation to align with broader risk-based capital reviews. The VOS Task Force will be restructured into the Invested Assets Task Force in 2026 to better oversee investment risk associated with insurers’ portfolios.
The Capital Adequacy (E) Task Force debated revisions to the Risk-Based Capital (RBC) preamble, aiming to clarify RBC’s regulatory purpose and restrict its public disclosure, amid industry concerns over transparency and investor use of RBC data.
The Statutory Accounting Principles (E) Working Group adopted clarifications around risk transfer analysis in combination reinsurance contracts and extended interim guidance permitting the admittance of negative interest maintenance reserves (IMR). Further discussions on accounting treatments for investment subsidiaries, derivatives in asset-liability matching programs, and mortgage loans in statutorily recognized trusts were also conducted.
Finally, the NAIC advanced efforts on regulatory frameworks related to insurers’ use of artificial intelligence (AI). This includes exposure of an AI Systems Evaluation Tool for assessing both financial and consumer risks, continued refinement of definitions for third-party data and model vendors, and consideration of an NAIC model law on AI use within the industry, reflecting a growing prudential regulatory focus on AI technologies.