Federal Updates

On September 15, 2026, Treasury Secretary Scott Bessent appeared before the House Financial Services Committee for his annual testimony on the state of the international financial system. The hearing included notable exchanges on insurance regulation as well as an extensive discussion of artificial intelligence safety, cybersecurity, and innovation.

On insurance, in response to questioning by Rep. Downing (R-MT), Secretary Bessent stated that the Federal Insurance Office (FIO) was created under Dodd-Frank as a convener and observer, not a regulator, and agreed “a hundred percent” that Treasury should minimize its insurance activities and leave regulation to the states. Downing criticized the Biden-era FIO for overreach, including attempting to adopt European capital standards and making climate-related data calls on domestic insurers, and promoted his McCarran-Ferguson Restoration Act, which would abolish FIO while preserving certain key federal responsibilities.

Bessent reflected on his meeting with state insurance commissioners in May to discuss private credit, praising the depth and breadth of their work, and described Treasury’s role as identifying financial stability concerns and ensuring state regulators are aware of them. Separately, Rep. Flood (R-NE) linked skyrocketing home insurance premiums to third-party litigation financing (TPLF) and asked Bessent to commit to examining the tax treatment of TPLF; Bessent called it “a malignancy within our legal and financial system.”

On AI, Secretary Bessent stated that AI creators must be held liable for what they build, urged Congress not to grant the liability waivers the labs are requesting, and disclosed that the administration forced Anthropic to withdraw a model that did not pass safety criteria. Rep. Torres (D-NY) detailed the Hugging Face incident, and Bessent agreed the incident raises concerns but said he has not seen any specific AI safety legislation he would support. Several Democratic members—including Reps. Lynch, Waters, Cleaver, and Gottheimer—raised existential risk concerns, AI alignment failures, and the need for guardrails including a kill switch. Bessent maintained that it matters which country leads in AI development and advocated for more open-source U.S. models and chip export controls as the primary international enforcement lever.

NAIC Updates

On September 17, 2026, the Macroprudential Working Group circulated a revised Macroprudential Risk Assessment Summary Report in response to comments received from the ACLI (the only commenter). The working group made two “non-substantive” edits to the private credit discussion, removing the statements that private credit “remains at the forefront of the most significant credit risk” and “no matter how you define it, it appears to be a significant risk for the insurance industry.” The revised report instead characterizes private credit as “a significant credit risk monitoring priority based on the size of the exposure and the increasing trend” (p. 28), adding context on borrower information gaps, complexity, limited secondary market trading, and valuation challenges. On page 4, the Executive Summary adds that “the size of the exposure and the increased growth in the insurance sector led to our identification of private credit as a heightened risk.” The working group indicated that the ACLI’s remaining comments and suggestions will be considered in connection with the issuance of the final report. Interested parties have until September 25 to raise concerns with the revisions; absent objections, the document will be finalized shortly thereafter.

Beyond the private credit edits, the ACLI’s letter expressed support for the NAIC’s macroprudential efforts but raised several themes, including the need to distinguish between increased exposure and increased risk; cautioning that growth in an activity does not by itself demonstrate greater financial stability risk; a recommendation to reconsider whether FABN and FHLB exposure is better reflected in the liquidity risk framework rather than interconnectedness; a call for greater transparency where expert judgment drives risk determinations; and a recommendation that the report more fully integrate its findings on strong capitalization and favorable liquidity into the discussion of emerging vulnerabilities to present a more balanced overall assessment.

The Life Insurance and Annuities Illustrations Working Group (LIAIWG) wrapped up discussions on potential modifications to the Annuity Disclosure Model Regulation (#245). On September 15, the working group reached consensus on the direction for illustrating additional scenarios and providing supplemental information (Issue 4C, see page 11), endorsing Options 2, 3, and 4, with Option 4 receiving the broadest support. Following the call, Ben Slutsker (Chair, MN) issued a Chair Exposure soliciting revisions to Model #245 that incorporate the working group’s preliminary conceptual decisions to date; proposals must include a one-page memo and a mockup/visual of the resulting illustration. Comments are due November 10. Details from the Issue 4C discussion included:

Prescribed Scenarios (Option 4) & the Guaranteed Floor (Option 2): Several regulators coalesced around fixed, level scenarios at prescribed percentages rather than scenarios rooted in historical data. Some key regulator perspectives:

• Tomasz Serbinowski (UT) warned that back casted returns can paint a misleadingly favorable picture; for example, if the “worst case” 10-year scenario still shows a 7%+ return, consumers may not appreciate the downside.
• Danielle Torres (MI) favored a combined approach that would pair guaranteed values with prescribed return scenarios so that an illustration shows both the contractual floor and the range of potential outcomes at designated percentages.
• Matt Gendron (RI) considered whether replacing the current “low” scenario with guaranteed values could confuse consumers about actual down-market performance, while Matt Elston (OH) argued that showing the guaranteed floor when an index drops would help consumers understand how the product’s non-guaranteed elements (NGEs) operate during a downturn. Slutsker suggested this could be addressed by building Option 4 scenarios that are internally consistent, showing not just the index return but also how NGEs (e.g., caps and participation rates) would interact with that return, giving consumers a coherent picture of product performance in each scenario.
• Elston cautioned that fully standardized numbers could obscure the diversification value of differently designed indices, which may behave differently under varying market conditions.

Supplemental Information Outside the Illustration (Option 3): Oregon proposed reframing Option 3 as educational tables and visuals showing alternate scenarios divorced from product-specific NGE projections. This material could potentially be provided as a separate document alongside the Buyer’s Guide. Oregon initially suggested including actual index history, but New York opposed this approach. The working group ultimately agreed to a narrowed version: alternate scenario tables and visuals without historical data, provided they do not materially increase illustration length.

Consumer Advocate Perspectives: Birny Birnbaum (Center for Economic Justice) argued for eliminating hypothetical scenarios entirely, contending that each AG 49 revision has been followed by industry product redesigns intended to circumvent the regulation’s intent, and that illustrations should instead focus on how expenses, costs, and caps determine product performance over time. Bonnie Burns (California Health Advocates) cautioned against sacrificing disclosures or written explanations for brevity and warned against overwhelming consumers with supplemental documents on top of riders and other materials. Jerry Vanderzanden (LICAC) favored consistency across carriers and using visuals over numbers where possible.

The main substantive item on the September 17 Life Actuarial Task Force (LATF) call was a discussion concerning comment letters received on the asset portfolio segmentation concept exposed at the Summer National Meeting. The proposal was designed to “limit cherry-picking of assets in PBR” to ensure consistency with the PBR principle requiring alignment between the model portfolio and actual company management practices. The proposal would add several documentation requirements to support asset segmentation within the model portfolio. If those requirements are not met, the company would be subject to a more prescriptive standard (reflecting a model portfolio that represents a pro rata slice of the entire actual company general account portfolio).

These new requirements would apply broadly to VM-20, 21, 22, 30, and 31 and to all starting assets, including interest maintenance reserve (IMR). They also would apply to non-insulated separate accounts. The ACLI’s comment letter raised three points: (1) a recommendation to exclude VM-30 from the scope of any future APF; (2) a suggestion that existing documentation that meets current requirements should be acceptable; and (3) a suggestion that there needs to be a recognition that there are limitations to the in-force application of PBR.

Following discussion, the task force took the following approach on these issues: (1) VM-30 will remain in-scope for now, but the task force may consider a less rigorous approach to VM-30 business; (2) the task force will continue plans to develop a standardized document/template to collect this information, while ensuring that the completion is not more onerous than it needs to be; and (3) the task force will recognize that there may be instances where certain business can’t fit within PBR. The draft APF will provide for the necessary flexibility. Ben Slutsker (MN) will work on a draft APF in the next month, followed by a lengthy comment period.

The task force also adopted revised Historical Mortality Improvement (HMI) and Future Mortality Improvement (FMI) scales proposed by the Society of Actuaries. The ACLI is considering a proposal that would discuss the governance surrounding ongoing maintenance of these tables. Finally, the task force adopted the 2027 Generally Recognized Expense Table (GRET), originally exposed at the Summer National Meeting.

International Developments

On September 15, 2026, the Bermuda Monetary Authority (BMA) published a Consultation Paper (CP) proposing a phased approach to establishing a resolution framework for commercial insurers in Bermuda, aligned with the Financial Stability Boards’s (FSB’s) Key Attributes and the International Association of Insurance Supervisors (IAIS) Insurance Core Principles (ICPs) and ComFrame. Comments are due December 15. This initial phase addresses three foundational elements:

• Designation of the BMA as Resolution Authority: The BMA proposes to designate itself as the Resolution Authority (RA) for insurance sector entities, citing regulatory expertise, operational synergies with existing crisis management arrangements, and cost efficiency. To address potential conflicts with its supervisory role, the BMA would establish internal governance safeguards including “operational separation, distinct staffing, dedicated reporting lines and a decision-making structure for resolution activities.”
• Resolution Objectives: The CP sets out five proposed resolution objectives: (1) protecting policyholders; (2) protecting Bermuda’s financial stability; (3) minimizing use of public funds; (4) protecting client assets; and (5) maintaining confidence in Bermuda’s insurance market. The BMA favors a “flexible, context-sensitive approach” without a fixed priority ranking, balancing objectives based on the circumstances of each case.
• Scope: The regime would apply to domestic insurers and insurers designated as internationally active insurance groups (IAIGs) where the BMA is the group-wide supervisor. Notably, the BMA may also bring within scope “insurers licensed by the BMA that are part of a foreign-incorporated IAIG,” with coordination and cooperation with other relevant regulatory authorities prioritized to avoid misaligned resolution-related requirements. The BMA further reserves discretion to include additional Bermuda-domiciled commercial insurers where their failure could pose a significant risk to Bermuda’s financial stability or real economy.

The CP notes that not all in-scope insurers would require a resolution plan. The RA would determine which insurers warrant a plan based on criteria aligned with the Scope of Insurers Subject to the Recovery and Resolution Planning Requirements in the FSB Key Attributes, including nature, scale, complexity, substitutability, and interconnectedness.

The BMA emphasizes proportionality throughout, intending to leverage existing powers, such as Bermuda’s Provisional Liquidation regime and the recovery planning framework, with targeted enhancements where needed. Resolution powers, tools, cross-border cooperation, and other key framework elements fall outside this initial phase and will be addressed in future consultations.

The September 2026 Eurofi Views Magazine, published in connection with last week’s Financial Forum conference, features contributions from leading international policymakers, supervisors, and industry figures. There is considerable discussion on private credit and asset-intensive reinsurance (AIR), which is largely consistent with themes that have been building across supervisory and industry discourse for some time.

• Private Credit: Contributors describe private credit as a rapidly growing subsector of insurers’ broader shift into alternative assets, valued for its yield, diversification, and liability-matching properties. Supervisors (including the European Insurance and Occupational Pensions Authority (EIOPA), IAIS, NAIC, European Central Bank, and the Italian Insurance Supervisory Authority) acknowledge the asset class’ role in financing strategic priorities but consistently flag concentration risk, valuation opacity, hidden leverage, and data gaps as the principal supervisory concerns. Industry voices broadly share the growth thesis while emphasizing the need for stronger governance and market infrastructure. No contributor labels private credit a systemic risk today, but the prevailing supervisory view is that the conditions for it to become one are building and continued growth without corresponding advances in transparency and cross-border cooperation could tip the balance. Industry participants, by contrast, generally frame these as manageable risks.
• AIR: EIOPA, IAIS, and the NAIC identify AIR as a structural trend warranting heightened supervisory attention, though European exposures remain limited. Contributors note it introduces counterparty, recapture, and procyclicality risks, especially through complex cross-border structures. The IAIS is explicit about potential transmission channels (including mass recaptures and concentrated jurisdictional exposures) through which rapid growth without adequate supervisory response could amplify financial market disruption.

Privacy Updates

The Federal Trade Commission (FTC) rescinded its 2021 Policy Statement On Breaches by Health Apps and Other Connected Devices. The statement applied the FTC’s Health Breach Notification Rule to health apps and connected devices that collect consumer health information. The decision to rescind the statement comes after the FTC determined that the statement provided minimal benefit and was superseded in 2024 by updates to the Health Breach Notification Rule to cover health apps and connected devices like fitness trackers.

The Cybersecurity and Infrastructure Security Agency (CISA) released an updated Insider Threat Mitigation Guide. The guide gives organizations a look at insider threats and provides practical steps to develop or enhance an insider threat program. The updated guide addresses developing considerations including the rise in hybrid and remote work and advances in artificial intelligence.