NAIC update: Fall 2022 National Meeting

Ongoing conversations

When considering privacy concerns, the NAIC Privacy Protections Working Group is actively building a reference document to keep an open line of communication regarding different privacy model acts. Specifically, the new Privacy Protections Model Act reference paper can be used to support state insurance departments as they discuss data collection, data ownership, and disclosure of information in insurance transactions within their own respective legislatures.

On a similar note, more expansive uses for data have raised concerns regarding data transparency and accessibility. With AI becoming such a popular tool across the industry, it has become clear that a regulatory framework will need to be built and adopted to effectively manage both data inputs and resulting outcomes. Specifically, there are concerns around regulation, third-party development of AI models, potentially biased algorithms, and outputs that don’t truly reflect consumer expectations.

Equity in the industry was top of mind as well. The Special Committee on Race and Insurance, the NAIC’s coordinating body on identifying issues regarding race and DEI within the insurance sector, will continue to research and analyze insurance, legal, and regulatory approaches to addressing different forms of discrimination, disparate treatment, and the subsequent impacts.

In terms of capital, the NAIC will not be pausing efforts to include collateralized loan obligations as a financial modeled security and instead will potentially turn to risk-based capital methodology to analyze structured assets. In a Capital Markets Special Report, the NAIC also added that “the consequences of less stringent underwriting on the underlying bank loan collateral will result in substantially lower recovery rates during the next recession.”

When considering other points of interest and potential risks within the industry, the topic of wildfires emerged, with specific discussion around Colorado’s consideration of a Fair Access to Insurance Requirements (FAIR) Plan. Rather than take a reactive approach, other state insurance departments have previously encouraged regulations that incentivize disaster preparedness and mitigation. These examples—whether they’re referring to fires, floods, or something else—can help insurance agents across the country plan a more effective road map moving forward.

Moving forward

Learn more about the course the NAIC has charted for the industry—and what the impact of that might look like for your business—in this event overview report. Plus, explore topics of interest from past events thanks to the NAIC Updates Collection.