International Developments

The International Association of Insurance Supervisors (IAIS) has published the final version of its revised Application Paper on resolution powers, preparation and plans, replacing the consultation draft circulated in November 2025. This paper provides supporting material for Insurance Core Principle (ICP) 12 (Exit from the market and resolution) and serves as a key reference for international peer reviewers assessing whether jurisdictions’ resolution frameworks are consistent with IAIS standards.

Most significantly, the U.S. entries in Annexes 1 and 2 now incorporate in full the descriptive language that NOLHGA and the NCIGF drafted and submitted through the NAIC. The prior version contained only a cursory reference to state receivership laws; the final paper now provides a comprehensive description of the U.S. state-based receivership framework, including the commissioner-as-receiver model; the role of the NAIC Model Acts (#555, #520, and #540); the distinct proceedings available under state law; and an explicit description of the role of state guaranty associations in providing policyholder protection through assumption reinsurance, portfolio transfers, and claims payment.

Beyond the U.S. descriptions, the revised paper contains two other notable developments. First, the paper had adopted somewhat stronger language around the role of policyholder protection schemes (PPSs), including with regard to defined decision rights, timely PPS involvement in resolution planning, and forward-looking assessment of PPS coverage limits and their effect on loss-absorbing capacity. Second, entirely new subsections on resolution planning for ceding insurers and reinsurers address scenarios where a reinsurer’s failure cascades to its cedants, including through recapture of asset-intensive reinsurance, and call for assessing whether such contagion could result in indirect losses for policyholders or a material adverse impact on economic activity.

In other international news, the Financial Stability Board (FSB) recently convened its inaugural ReSolve event, bringing together members of all three Cross-Border Crisis Management working groups—covering banks, financial market infrastructures, and insurers. Dominique Laboureix (Chair, Single Resolution Board and FSB Resolution Steering Group) stressed that financial crises are not confined to a single sector and that authorities must move beyond siloed, jurisdiction-specific planning toward a more coordinated state of collective preparedness. Laboureix observed that although core resolution frameworks have been broadly established, more work is needed to understand cross-sectoral spillover effects, including whether resolving a banking institution could destabilize an insurer or clearing house and vice versa.

FSB Secretary General John Schindler reinforced the point, underscoring that deepening interconnections across the global financial system allow stress in one segment to spread rapidly and unpredictably to others, making coordinated, multi-sector oversight a necessity. Schindler also connected the event to the FSB’s ongoing strategic review of its crisis preparedness activities, which is testing whether current approaches hold up across the full crisis continuum, from recovery planning through post-stabilization restructuring.

Federal Updates

On July 10, 2026, the Federal Reserve released its semiannual Monetary Policy Report, concluding that the U.S. financial system remains sound and resilient. The report indicates that vulnerabilities have been roughly unchanged since January 2026, flagging stretched asset valuations and localized stress in private credit. Notable findings include:

• The only direct reference to the insurance industry is framed within the Fed’s broader financial stability monitoring, identifying borrowing levels at the largest life insurers as remaining “well into the upper quartile” of historical norms and “well above regulatory benchmarks.”
• Regarding private credit, investor confidence in the broader asset class declined during the first half of 2026, with net outflows from funds offering periodic liquidity, though spillover into other markets has been limited. Withdrawal pressure in private credit funds reflects actual borrower defaults, not solely investor sentiment, alongside broader concerns about underlying asset quality.
• High-quality corporate bond spreads remained tight by historical standards. However, the Fed observes that “credit concerns increased for riskier debt and spreads widened for speculative-grade technology bonds and leveraged loans,” a divergence linked to weaker debt-servicing capacity among lower-rated, floating-rate borrowers in a sustained higher-rate environment.
• The Middle East conflict is a lasting structural force rather than a short-term disruption. The conflict is driving higher energy prices, supply chain strain, rising inflation expectations, foreign central bank tightening, and financial market volatility.
• Recently announced independent task forces will examine areas central to the Fed’s conduct of monetary policy: communications, balance sheet policy, data quality, productivity and jobs, and inflation frameworks. Each task force is charged with examining current practice, considering alternatives, and proposing next steps for the Fed’s consideration over the remainder of the year.

NAIC Updates

On July 13, 2026, the Life Insurance and Annuities (A) Committee approved a model law development request from the Life Insurance and Annuities Illustrations Working Group (LIAIWG) to revise the Annuity Disclosure Model Regulation (#245). Ben Slutsker (LIAIWG Chair, MN) provided a recap of the driving concerns: unrealistically high illustrated annuity returns (10–20% per year) that may lead to unreasonable expectations for consumers, reverse-engineered indices, and issues with the general length and transparency of disclosures. Only 10 states have adopted Model #245, and while an analysis shows illustrated rates are generally lower in adopting states, the current model has reduced but not eliminated problematic practices. Commissioner Ommen (Chair, IA) questioned whether LIAIWG would consider registered index-linked annuities (RILAs) in its work. Slutsker confirmed that Model #245 does not currently apply to RILAs but acknowledged that many of the same concerns apply; the question of extending model enhancements to those products will be among the topics discussed during the next several working group calls.

The committee also adopted the 2027 Valuation Manual amendments, a package of 14 amendments from the Life Actuarial Task Force largely consisting of clarification, correction, and consistency updates. Plenary will consider the amendments at the Summer National Meeting.

The Life RBC Working Group met on July 16 (note that the working group will not meet at the Summer National Meeting in Columbus) and took the following actions:

• Exposed Revised GOES C-3 Field Test Specifications until July 30: The working group’s most substantive discussion concerned changes to the American Academy of Actuaries’ field test specifications to modernize C-3 Phase I to be more consistent with the C-3 Phase II/VM-22 methodology. Following the exposure of the initial field test specifications, the working group established a drafting group made up of regulators, the Academy, the ACLI, and other stakeholders. Rick Hayes (the Academy) walked through the key changes since the prior draft—removal of the cover questions; a shift in field test timing to September and October 2026; flexibility for companies to use either a September 30 or December 31, 2026, valuation date; added granularity in Section G requesting scenario-specific results; and a new, more granular set of attribution runs. The ACLI is still reviewing the latest guidance and any additional comments but believes the field test is on the right track. The goal is still to produce a finalized specifications document within the coming weeks so the field test can proceed on its September to October 2026 timeline.
• Reviewed 2025 Life RBC Statistics: The working group discussed its annual Life RBC statistics, which showed 18 companies triggering an action level in 2025 (up from 2024). Ben Slutsker (Chair, MN) cautioned that this figure tends to fluctuate meaningfully from year to year rather than reflecting a clear trend. He also highlighted that the C-1 asset risk components (common stock and other asset risk, combined) account for more than half of total RBC.
• Adopted the 2026 Newsletter: The working group adopted the 2026 Life and Fraternal RBC Newsletter, which compiles all proposals affecting RBC instructions adopted by the group during the year. The working group will post the newsletter to its webpage.
• Approved a Referral to SAPWG on Collateral Loans Schedule BA Reporting: The working group approved a referral to the Statutory Accounting Principles (E) Working Group (SAPWG) requesting additional Schedule BA disclosures tied to the look-through collateral loan framework adopted under proposal 2025-16-L MOD. Recall that these changes do not take effect until year-end 2027. Specifically, the referral asks SAPWG to incorporate annual statement changes requiring disclosure of (1) whether independent verification of the collateral’s fair value was obtained; (2) details of that verification, including the appraisal date and the name of the verifying entity; and (3) a range of valuations. Because the collateral loan framework is not effective until 2027, SAPWG has time to work through the requested disclosure changes.
• Disbanded the Variable Annuities Capital and Reserve Subgroup: The working group voted to disband the Variable Annuities Capital and Reserve (E/A) Subgroup as its charges have generally been fulfilled. Any outstanding work will be handled by the working group.

At its July 14 meeting, the Long-Term Care Actuarial (B) Working Group continued its collaborative effort within the B Committee to deepen understanding of hybrid products that combine LTC coverage with life insurance. The aim for the Senior Issues Task Force and the working group is to identify any models needing revision to foster innovation and strengthen regulation around these evolving products. Industry representatives from Milliman, Trustmark, and Transamerica presented, sharing insights into the factors driving growth in hybrid policies and highlighting distinguishing features for both group vs. retail/individual products. The conversation touched on the different types of hybrid products, key pricing assumptions, and the mechanics of how benefits are triggered.

In response to Fred Andersen’s (Chair, MN) questions, speakers also identified a few regulatory areas that may merit reconsideration. These included the 5% compound inflation protection requirement; rules governing nonforfeiture benefits; and VM-20, which currently provides less clarity on LTC assumptions compared to life insurance assumptions. Andersen expressed interest in having more time for additional questions from regulators and interested parties.

The Health RBC Working Group took the following actions on its July 15 call:

• Received 2025 Health RBC Statistics: There were 1,145 health RBC filings loaded onto the NAIC database. Twenty-three companies triggered an action level in 2025 (9 company action level, 4 regulatory action level, 3 authorized control level, and 7 mandatory control level), and 20 companies triggered the trend test. NAIC staff noted that the aggregate premium line now includes Medicare and Medicaid premium, which had been omitted in prior years.
• Received Two Comment Letters on Additional Data Analysis
• Discussed Time Horizon for Factor Development: Options include a one-year time horizon and the Academy’s three- and five-year options.
• Discussed Medicaid Pass-Through and State Payment Terms: Steve Drutz (Chair, WA) noted that state-directed payments and state payment terms are shifting under new CMS rules from “not at risk” to “at risk.”

Privacy Update

The federal government announced the creation of GOLD EAGLE, a cybersecurity clearinghouse to allow for cybersecurity vulnerability coordination between open-source software partners and American critical infrastructure companies to receive and patch cyber vulnerabilities. The clearinghouse stems from the Trump Administration’s June 2, 2026, Executive Order “Promoting Advanced Artificial Intelligence Innovation and Security” (EO 14409). The model is designed to level frontier AI capabilities to assist companies in staying ahead of potential threat actors, reduce duplicative scanning efforts, and deliver prioritized and actionable threat and remediation information.