NAIC Updates

The NAIC has posted a preview for its upcoming 2025 Summer National Meeting (August 9–13 in Minneapolis). Some noteworthy items include:

• Discussion of comments received on preliminary high-level RBC principles (Risk-Based Capital Model Governance Task Force)
  
• Continued discussion of VM-22, AG 55, GOES, and AG 53 reviews (Life Actuarial Task Force)
  
• Discussion of comments on combo reinsurance and negative interest maintenance reserve (IMR) proposals (Statutory Accounting Principles Working Group)
  
• Receive reports on the modeling methodology for collateralized loan obligations (CLOs) (Valuation of Securities Task Force)
  
• Update on the credit rating provider (CRP) rating due diligence framework and filing exemption discretion projects (Valuation of Securities Task Force)
  
• Update on the ongoing Aggregation Method (AM) review, including technical input on topics such as interest rate risk, and consideration of a recommendation on scalars for use in the final AM (Aggregation Method Implementation Working Group)
  
• Discuss comments on the draft AI Systems Evaluation Tool and the possibility of an AI model law (Big Data and AI Working Group)
  
• Discussion of (1) a Chief Financial Regulator Forum referral on cybersecurity compliance reviews and response; (2) the current status of Cybersecurity Event Notification Project Documentation; and (3) changes to the cybersecurity supplement for 2024 and forward (Cybersecurity Working Group)
  
• Discussion of a proposed working definition of “third party” (Third-Party Data and Models Working Group)
  
• Center for Insurance Policy and Research (CIPR) event on the U.S. Health Care Financing System for 2026: Trends and Implications for Consumers and States
  
• Insurance Compact consideration of adoption of new and amended Group Annuity and Life Uniform Standards

The Financial Examiners Handbook Technical Group exposed a set of revisions to various sections of the Financial Condition Examiners Handbook. The changes would (1) make minor clarifying updates to the Examination Planning Procedures; (2) add a reference to the new Catastrophe Reinsurance Interrogatory; and (3) update Exhibit Q – Review and Approval Summary to ensure that the examiner meets with assigned analysts to share results of the examination. Comments are due August 6.

On July 7, the Big Data and Artificial Intelligence Working Group exposed a draft AI Systems Evaluation Tool until August 6. The tool is meant to assist regulators in identifying and assessing AI-related financial and consumer risks evolving from a regulated entity’s use of AI systems. It is meant to supplement existing market conduct, financial, and other exams and includes four optional exhibits for use in assessing (1) how many models a regulated entity has and their intended use cases; (2) the entity’s governance framework; (3) high-risk models; and (4) the sources and types of data used in a particular model. Comments will be discussed at the Summer National Meeting on August 12. The working group also posted comments received on the AI Model Law RFI.

On July 10, the Third-Party Data and Models Working Group heard interested party comments on suggested definitions of “third party data model” and “third party data vendor.” Those that offered comments during the call generally shared similar views, suggesting (1) it is premature to develop definitions before clearly outlining objectives for the oversight framework and identifying what problems the working group is seeking to address; and (2) it will be challenging to develop one-size-fits-all definitions, and a list of exclusions likely will be necessary. The working group intends to develop a working definition for discussion at the Summer National Meeting.

Also on July 10, the Life Actuarial Task Force received a presentation from the American Academy of Actuaries on Yearly Renewable Term (YRT) Reinsurance. Regulators and Academy members recognized that companies take different approaches on determining whether an agreement is guaranteed, partially guaranteed, or non-guaranteed. Ben Slutsker (MN) suggested that there should not be much variation between company practices in this space. Ultimately, the task force decided to take the issue offline and discuss whether this should be studied further by LATF or the Valuation Analysis Working Group (either approach will be conducted in regulator-only sessions until a proposal is developed). At the end of the call, Rachel Hemphill (Chair – TX) reported that this week’s call would be regulator-only and would consist of a company reporting on its non-U.S. life mortality tables. Hemphill reminded industry that LATF approval is required to use non-U.S. mortality tables.

  Staff Contact - Sean McKenna

IAIS Developments

The International Association of Insurance Supervisors (IAIS) held its virtual Global Seminar on July 8–10, 2025. The conference featured a dialogue session with IAIS leadership; engagement sessions with the chairs of the Macroprudential, Policy Development, and Implementation and Assessment Committees; and panels to discuss key insurance sector risks and natural catastrophe protection gaps. Highlights included:

• Leadership Update: IAIS Executive Committee Chair Shigeru Ariizumi announced he is stepping down from his role as Vice Minister for International Affairs at the Financial Services Agency of Japan effective July 22. He will then serve as a Special Advisor, which will allow him to continue in his IAIS leadership capacity until a new Chair is elected later this year.
  
• Structural Shifts in the Life Insurance Sector: Dieter Hendrickx (Chair, Macroprudential Committee) provided an overview of this year’s Global Monitoring Exercise (GME) themes, one of which is insurers’ increased investment in private credit. He noted the focus on private credit fits into the broader work on alternative assets, and the GME findings and Issues Paper on structural shifts in the life insurance sector will serve as the basis for informing next steps in the supervisory response to these trends. The final Issues Paper and 2025 Global Insurance Market Report (where aggregate GME findings will be disclosed) are expected at the end of the year. GME findings will also be reported to the Financial Stability Board (FSB).
  
• Insurance Capital Standard (ICS) Implementation: The Policy Development Committee is largely focused on materials related to ICS implementation. ICS-related standards for supervisory reporting and public disclosure will be published for consultation in the fourth quarter, and a draft Application Paper on availability of capital is planned for 2026. The application paper will focus on how group-wide supervisors address the availability of capital, particularly with a consolidated standard like the ICS.
  
• Recovery & Resolution Planning: Draft updates to the existing Application Papers on resolution powers and planning and recovery planning are expected to be published for consultation in the fourth quarter.
  
• Natural Catastrophe Protection Gaps: This continues to be a priority area for the IAIS. The 2025 Special Topic Global Insurance Market Report will focus on the potential financial stability implications of natural catastrophe protection gaps, and the IAIS has increased its collaboration efforts with global policymakers. The IAIS partnered with the G20 Sustainable Finance Working Group to develop a paper on multi-party solutions to address natural catastrophe protection gaps, which will be published later this month.

In other news, the IAIS published its final Application Paper on fair treatment of a wide range of consumers. The paper discusses and provides recommendations on ways barriers can be removed to ensure consumers are treated fairly and have access to needed insurance products, with a focus on implementation of ICP 19 (Conduct of Business). A public background session is scheduled for August 12 at 7:00 a.m. ET (register here).   Staff Contact - Sean McKenna

Former NOLHGA Chair Merle Pederson Passes Away

Merle Pederson, former NOLHGA Chair and a longtime proponent of the guaranty system, passed away on July 9, 2025. He was 69. His obituary can be found here.

Pederson served as Officer and Counsel and then Vice President and Counsel of the Government Relations Department with the Principal Financial Group. Before joining Principal, he served as the North Dakota Deputy Insurance Commissioner from 1987–1989.

Pederson served three terms on the NOLHGA Board of Directors and was Chair from 2005 to 2006. He also chaired NOLHGA’s Finance and GA Laws Committees and served on the Emerging Issues (a precursor to the Public Policy Coordinating Committee), Legal, and Coverage/Claims Committees. A tireless supporter of the guaranty system, he also served on the Boards of Directors of the Illinois, Iowa, Colorado, Montana, Minnesota, North Dakota, Texas, and South Dakota guaranty associations.

NOLHGA extends our deepest sympathy to Merle’s family and friends.

  Staff Contact - Sean McKenna