April 2025 MPC Meeting Website Goes Live

The website for NOLHGA’s April 2025 MPC meeting in Edina, Minnesota, is now available. The site offers both in-person and virtual attendee registration for the meeting, which will be held on April 30 and May 1. The agenda for the meeting will be released in March, but we expect the meeting to run all day on April 30 and till noon or so on May 1.

The meeting website also offers online hotel reservations for the Westin Edina Galleria, the host hotel for the meeting. The deadline for reservations at the NOLHGA rate of $269/night plus tax is April 7. The room block could sell out earlier than that, so we encourage everyone to book their rooms as soon as possible.

If you have any questions about the meeting, please contact Sean McKenna. If you have any trouble accessing the meeting website, please contact Dan Hicks.

  Staff Contact - Sean McKenna

Federal Updates

On February 11, 2025, President Trump nominated Daniel Aronowitz as the Assistant Secretary of Labor for the Employee Benefits Security Administration (EBSA). Aronowitz currently serves as President of Encore Fiduciary, a fiduciary liability insurance underwriter for employee benefit plans. If confirmed, Aronowitz would oversee activity related to fiduciary regulation of investment advice and guidance for pension fiduciaries on pension risk transfers to group annuities, among other issues.

Aronowitz’s views on these issues are no secret: Aronowitz has criticized the Department of Labor’s (DOL’s) 2024 fiduciary rule as “regulatory overreach” and has accused plaintiffs’ law firms of weaponizing ERISA in plan forfeiture lawsuits.

Also on February 11, the DOL filed a motion in the Fifth Circuit to pause its appeals in two court cases about the DOL’s 2024 fiduciary rule. In its motion, the government said new agency officials needed time to familiarize themselves with the cases. The DOL had filed notices of appeal in September 2024. The 2024 fiduciary rule was the DOL’s second attempt to bring retirement investment advice under fiduciary obligation.

President Trump also issued nominations last week for Consumer Financial Protection Bureau (CFPB) Director (Jonathan McKernan) and Comptroller of the Currency (Jonathan Gould). Both agencies have a seat on the Financial Stability Oversight Council (FSOC).

In other news, the Trump Administration has filed a notice of appeal to a case challenging the Biden administration’s expanded requirements for fixed indemnity insurance, and the Office of Management and Budget is reviewing one of the first proposed regulations from the Trump Administration that may be relevant to health insurers. According to the title, the rule would address program integrity controls for the Health Insurance Exchanges, which determine eligibility for premium tax credits to subsidize the cost of qualified health plan premiums for individuals and families purchasing coverage on their own.

  Staff Contact - Sean McKenna

NAIC Updates

G Committee: On February 13, 2025, the NAIC’s International Insurance Relations (G) Committee approved the creation of the Aggregation Method Implementation Working Group (AMIWG) with the following charges:

• Review group capital regulation of U.S. groups and their potential for comparable implementation of the insurance capital standard (ICS) including (1) sensitivity to changes in interest rates and their impact on the solvency of the U.S. life groups; (2) supervisory intervention of U.S. groups on group capital grounds; (3) use of scalars and choice of regulatory intervention points; and (4) reporting and disclosure requirements.
  
• Coordinate the U.S. implementation of the ICS via the AM by recommending potential domestic refinements and the final AM.
  
• Monitor any further development of the ICS at the International Association of Insurance Supervisors (IAIS) and what implications they may have for implementation of the AM.
  
• Report to and coordinate with the G Committee and any relevant groups under the Financial Condition (E) Committee.

The AMIWG will be led by Commissioner Mais (Chair - CT) and Deputy Commissioner Becky Easland (Vice Chair - WI). Membership will be drawn from both the G and E Committees and will be limited to 12 states with relevant regulatory interest and/or technical expertise. NAIC staff will begin developing the interested party distribution lists and scheduling meetings. Director Dunning (Chair - NE) noted that the AMIWG may meet at the Spring National Meeting.

The G Committee also approved its comments on the IAIS’s draft Application Paper on the supervision of artificial intelligence. The NAIC’s comments advocate for the inclusion of the NAIC’s AI-related work, including the AI Principles and the Casualty Actuarial and Statistical Task Force’s Regulatory Review of Predictive Models White Paper. Most other comments were intended to improve clarity.

RBC Governance Task Force: The NAIC has created an executive-level task force focused on model governance of the risk-based capital (RBC) framework. The task force has the following goals for 2025:

• Develop guiding principles for future RBC adjustments.
  
• Perform a comprehensive gap analysis to identify inconsistencies and prioritize solutions where appropriate.
  
• Design an education and messaging campaign to highlight the RBC framework’s strengths.

In the memo announcing the establishment of the RBC governance task force, Ohio Director Judy French and Wisconsin Commissioner Nathan Houdek suggested that the guiding principles should (1) address current investment trends with a focus on more RBC precision in the area of asset risk and (2) ensure that insurance capital requirements maintain their current strength and continue to appropriately balance solvency with the availability of products to meet consumer needs.

With respect to the gap analysis, the task force will engage with relevant stakeholders and subject matter experts to develop a list of gaps within the RBC formulas as well as consider the lack of consistency that currently exists within the methodologies of current life asset risks. The task force’s education and messaging efforts are being pursued in part to educate international insurance supervisors. The NAIC will hire an external consultant to provide an objective analysis and technical expertise to ensure that other NAIC resources are not used to support this task force.

Finally, the task force is charged with facilitating and overseeing coordination and alignment among all NAIC committees/task forces/etc. related to this initiative and implementation of the guiding principles. The charges say the work of this task force will not pause or terminate the work of other RBC-related committees/task forces/etc.

Risk-Based Capital Investment Risk and Evaluation (E) Working Group: Steve Smith (American Academy of Actuaries) provided a detailed update on the Academy’s work to identify comparable attributes to assess the risk of collateralized loan obligations (CLOs) (as an alternative to individual CLO modeling). Smith provided background on the project and described the CLO data the Academy obtained from Moody’s. The Academy has completed two milestones and has four remaining before a list of comparable attributes is brought to the working group for consideration. Smith indicated that the following steps remain in the project:

• Acquisition of C-1 bond factor model or results: Smith noted that once the Academy acquires the model (or receives requested outputs), the rest of the work will move more quickly; he anticipates this being the next step to occur.
  
• Parameterization of CLO cash flow model.
  
• Conversion of CLO cash flows into losses for C-1 capital (which will allow for the identification of comparable attributes and the development of base factors).
  
• Diversification and concentration analysis: Smith noted that this is a broad topic, and the Academy is looking at a number of items related to diversification and concentration, even mentioning possible asset class concentration ceilings.

Smith emphasized that the Academy is not going to force an RBC equivalence of the CLO with the RBC of the underlying collateral. Philip Barlow (Chair - DC) requested that the Academy provide a work plan highlighting the work that remains. Smith said if the Academy runs into issues with modeling the underlying collateral as described above, many of the other pieces will not be able to fall into place.

Finally, the working group exposed the ACLI’s proposal to treat SEC Registered Bond Mutual Funds the same as bond exchange-traded funds (ETFs) and private bond funds. Comments on the proposal are due March 7. The RBC IRE Working Group will meet at 8:00 a.m. on March 24 at the Spring National Meeting in Indianapolis.

  Staff Contact - Sean McKenna

AI Activity

On February 10, 2025, Congresswoman Maxine Waters (D-CA)—Ranking Member of the House Financial Services Committee—sent a letter to the Comptroller of the U.S. Government Accountability Office (GAO) requesting a study on AI’s impact on the insurance industry. Among other issues, Waters asked the GAO to study (1) how property/casualty and life insurers use AI in their underwriting and claims adjustment processes; (2) how the use of AI affects the pricing and availability of insurance coverage; and (3) how state regulators oversee insurers’ use of AI and what role federal AI-related regulations play.

In other news, New Jersey has adopted the NAIC’s AI model bulletin, setting forth the state’s expectations for insurers that use AI systems. So far, 23 jurisdictions have adopted the bulletin.

On February 10, the European Insurance and Occupational Pensions Authority (EIOPA) released for public consultation its opinion on AI governance and risk management in insurance. The opinion is addressed to insurance supervisors and covers AI use cases that do not involve life and health insurance underwriting or pricing (those use cases are already governed by the EU’s AI Act). Comments on the opinion are due on May 12.

  Staff Contact - Sean McKenna

Privacy Updates

House Committee on Energy and Commerce Chair Brett Guthrie (R-KY) announced a new comprehensive data privacy working group with the aim of working toward a national data privacy standard. Stakeholders interested in engaging with the working group can reach out to [email protected] for more information.

Spring legislative sessions are producing a number of privacy bills that would impact the insurance industry. Among them:

• The Illinois Data Privacy and Protection Act (HB 3041) would apply to covered entities defined as “any entity or any person, other than an individual acting in a non-commercial context, that alone or jointly with others determines the purposes and means of collecting, processing, or transferring covered data.” The act does not include any HIPAA- or Gramm-Leach-Bliley Act (GLBA)–related exceptions. Under the act, covered entities may not collect, process, or transfer covered data unless such actions are limited to what is reasonably necessary and proportionate to (1) provide or maintain a specific product or service requested by the individual to whom the data pertains, or (2) effect a permitted purpose under the act.
  
• In New York, the Digital Fairness Act (S4276) would require any entity that conducts business in New York and maintains the personal information of 500 or more individuals to provide meaningful notice about its use of personal information and to obtain specific, informed, and unambiguous opt-in consent for the processing of personal information in certain situations, such as when the information is needed for insurance purposes. The act does not contain HIPAA- or GLBA-related exemptions.
  
• Also in New York, the Online Consumer Protection Act (S4270) would require advertising networks to post a clear and conspicuous notice on the home page of their websites about their privacy policy and data collection and use practices. The act does not contain HIPAA- or GLBA-related exemptions.
  
• The Internet Privacy & Safety Act (HB 307) in New Mexico would apply to “covered entities” defined as legal entities that (1) are organized or operated for the profit or financial benefit of the entity’s shareholders or other owners; (2) offer online features, products, or services to consumers in New Mexico; and (3) alone or jointly with others, determine the purposes and means of collecting personal data directly from consumers, using personal data for targeted advertising, or engaging in the brokerage of personal data. The act does not contain GLBA or HIPAA exemptions but states that covered entities in compliance with federal privacy laws are deemed to be in compliance with the act for data subject to the requirements of the federal law. The act requires covered entities to comply with standards regarding privacy settings, privacy disclosures, public tools for consumers to report concerns, and data security practice and grants consumers rights with respect to data access, correction, and transfer.
  
• West Virginia’s Consumer Data Protection Act (HB 3498) would apply to persons who conduct business in West Virginia or produce products or services targeted to residents of West Virginia and who (1) during a calendar year, control or process the personal data of at least 100,000 consumers or (2) control or process the personal data of at least 25,000 consumers and derive over 50% of gross revenue from the sale of personal data. Financial institutions and data subject to Title V of the GLBA, protected health information under HIPAA, and covered entities or business associates governed by HIPAA are exempt from the act.

  Staff Contact - Sean McKenna