August 28, 2023

US NAIC Summer 2023 National Meeting Highlights: Risk-Focused Surveillance (E) Working Group


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

  • The Working Group discussed proposed changes to the NAIC’s Financial Analysis Handbook and Financial Condition Examiners Handbook to provide additional guidance for state insurance regulators in reviewing service agreements between insurers and their affiliates. Included among the proposed changes are:
    • More detailed procedures for domestic regulators to use in reviewing “Form D” filings made in connection with service agreements, including suggestions for requiring additional follow-up reporting by the insurer and review by the regulators.
    • More detailed criteria for domestic regulators to use in evaluating the pricing of affiliate services—whether on a cost or market pricing basis.

As a result of the discussions at the meeting, the Working Group agreed to adjust its proposed guidance on cost-plus reimbursement contracts. The Working Group also agreed to refer the updated guidance to the Financial Analysis Solvency Tools (E) Working Group and the Financial Condition Examiners (E) Handbook Technical Group for consideration for adoption.

  • The Working Group discussed the next steps to be taken to address a 2022 referral, received from the Macroprudential (E) Working Group on affiliated investment management agreements and capital maintenance agreements. Ed Toy, an investment specialist at Risk and Regulatory Consulting LLC and a former member of NAIC senior staff, provided a presentation on key considerations for the review by state insurance regulators of affiliated investment management agreements. The Working Group agreed to form a drafting group to develop guidance for NAIC handbooks in this area.

Looking ahead

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

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

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