Highlights from the US NAIC Summer 2023 National Meeting: Risk Focused Oversight Working Group (E) – Insurance Laws and Products

At the National Summer 2023 American National Meeting of the National Association of Insurance Commissioners (“NAIC”), the Risk Focused Oversight (E) Working Group (“Working Group”) met on August 14. The Working Group considered many topics and heard several updates. The following are the highlights of the meeting:

• The working group discussed Proposed changes to the NAIC Financial Analysis Handbook and the Handbook of Financial Condition Examiners To provide additional guidance to government insurance regulators in reviewing service agreements between insurance companies and their affiliates. Among the proposed changes are:

  • More detailed procedures that local regulators can use in reviewing Form D filings submitted in connection with service agreements, including suggestions for requiring additional follow-up reports by the insurer and review by regulators.

  
  

  • More detailed criteria for use by local regulators in assessing prices for ancillary services – whether cost-based or market-based.

As a result of the discussions at the meeting, the Working Group agreed to amend its proposed guidance on cost-excess reimbursement contracts. The working group also agreed to forward the updated guidance to the Financial Analysis Solvency Tools Working Group and the Financial Condition Examiners Manual Technical Group for consideration of adoption.

• The Working Group discussed the next steps to be taken to address the 2022 referral, received from the Macroprudential Working Group (E) on Subordinated Investment Management Agreements and Capital Maintenance Agreements. Ed Toy, an investment professional with Risk and Regulatory Consulting LLC and a former NAIC senior staff member, gave a presentation on key considerations for state insurance regulators’ review of affiliate investment management agreements. The working group agreed to form a drafting group to develop guidance for NAIC handbooks in this area.

I look forward

It is likely that there will be further developments on the above, particularly with regard to the review of affiliate investment management agreements and capital maintenance agreements. We will continue to follow and report on these developments.

To view additional updates from the NAIC US Summer 2023 National Meeting, visit our website Highlights page.

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