NAIC Bulletin: January 2017 - EY - United States

1 January 2017 . naic bulletin Highlights of the National Association of Insurance Commissioners meeting Fall 2016 update In this issue: The National Association of Insurance Commissioners ( naic ) recently held its Fall National Meeting on Executive Committee and Plenary .. 2. 9-13 December 2016 in Miami. This publication highlights issues that various naic groups have addressed Cybersecurity (EX) Task Force ..2. Principle-based reserving .. 2 since the 2016 Summer National Meeting. We hope you find it informative, and we welcome your PBR pilot project.

2 3 comments. Please contact your local EY professional for more information. Valuation Manual amendments ..4. XXX/AXXX Reinsurance Framework .. 4. Accreditation standards ..5. Variable Annuity Framework .. 5. What you need to know Quantitative impact study ..5 The Executive Committee and Plenary adopted the XXX/AXXX Credit for Reinsurance Model Effect on statutory accounting and Regulation to address the regulation of term life ( , XXX) and universal life with secondary Accounting Practices and Procedures guarantees ( , AXXX) reserve financing transactions.

3 (E) Task Force .. 5. Statutory Accounting Principles (E). Working The Property and Casualty (C) Committee adopted the 2016 Workers' Compensation Large Blanks (E) Working Group ..7 Deductible Study performed by the naic /IAIABC Joint (C) Working Group detailing the use and Life Insurance and Annuities (A) potential risks of policies with large deductibles. Committee .. 7. Life Actuarial (A) Task Force ..7 Various naic groups have taken actions to address the effect of long-term care insurer VM-22 (A) Subgroup ..8. Unclaimed Life Insurance Benefits (A) insolvencies on the naic statutory framework, including revisions to SSAP No.

4 35R, Guaranty Fund Working and Other Assessments, to allow insurers to consider expected renewals of short-duration health Health Insurance and Managed Care (B). Committee .. 8 contracts in determining the asset recognized from accrued guaranty fund liability assessments. Health Actuarial (B) Task Force ..9. Long-Term Care Actuarial (B) The Variable Annuities Issues (E) Working Group made progress in its efforts to develop the scope Working and objectives of the 2017 Quantitative Impact Study that will assess the feasibility of potential Property and Casualty Insurance (C).

5 Committee .. 9 changes in the statutory accounting, reserving and risk-based capital (RBC) requirements for Financial Condition (E) Committee .. 9 variable annuities. Capital Adequacy (E) Task Force ..10. Investment RBC (E) Working The naic elected its 2017 executive officers: President Ted Nickel (Wisconsin), President-elect Group Capital Calculation (E). Working Julie Mix-McPeak (Tennessee), Vice President Eric A. Cioppa (Maine) and Secretary-Treasurer Group Solvency Issues (E) David Mattax (Texas). Working ORSA Implementation (E) Subgroup.

6 11. Receivership and Insolvency (E). Task Force ..11. Reinsurance (E) Task Force ..11. Risk-Focused Surveillance (E). Working Valuation of Securities (E) Task Force ..12. Financial Regulation Standards and Accreditation (F) Committee .. 13. International Insurance Relations (G). Committee .. 13. Appendix A Statutory Accounting Principles Working Group .. 14. Appendix B Blanks Working Group .. 19. Appendix C Capital Adequacy Task 20. EY AccountingLink | Executive Committee and Plenary The Executive Committee and Plenary adopted amendments to the Long-Term Care Insurance Model Act (#640) and the Long-Term Care Insurance Model Regulation (#641) to update the disclosure and performance standards for long-term care insurance in response to the significantly large and/or multiple rate increases experienced by policyholders on their long-term care policies.

7 Separately, the Executive Committee and Plenary adopted revisions to the naic Guidance Manual for Rating Aspect of the Long-Term Care Insurance Model Regulation, which is used to evaluate compliance with the requirements of the model regulation. The Executive Committee and Plenary adopted amendments to the Life and Health Insurance Guaranty Association Model Act (#520) to clarify guaranty association coverage does not apply to factored structured settlement annuity benefits ( , structured settlement annuity benefits that have been sold to a third party by the original annuitant).

8 The Executive Committee and Plenary also adopted amendments to the Separate Accounts Funding Guaranteed Minimum Benefits Under Group Contracts Model Regulation (#200) to update and align its content with the Synthetic Guaranteed Investment Contracts Model Regulation (#695). The Executive and Plenary Committee adopted the Term and Universal Life Insurance Reserve Financing Model Regulation ( , XXX/AXXX Credit for Reinsurance Model Regulation), as well as revisions to Actuarial Guideline XLVIII Actuarial Opinion and Memorandum Requirements for the Reinsurance of Policies Required to be Valued under Sections 6 and 7 of the naic Valuation of Life Insurance Policies Model Regulation (AG 48).

9 Refer to the XXX/AXXX Reinsurance Framework section in this publication for more information. The Executive Committee and Plenary also adopted revisions to: Actuarial Guideline XLVII The Application of Company Experience in the Calculation of Claim Reserves Under the 2012 Group Long-Term Disability Valuation Table (AG 47), limiting its application if an insurer does not have a large enough number of group long-term disability (GLTD). claims to require the development of an experience study Actuarial Guideline XLVIX The Application of the Life Illustrations Model Regulation to Policies with Indexed-based Interest (AG 49)

10 , making its provisions applicable to all in-force life insurance policies within its scope, regardless of the date the policy was sold In addition, the Executive Committee and Plenary adopted revisions to the Review Team Guidelines and the Accreditation Review Process and Procedures to enhance the accreditation program and related guidance, effective 1 January 2017 . The revisions shift the focus of the accreditation standards from compliance toward substance and quality of the work performed in the accreditation review process.