NAIFA’s Policy Director Roger Moore attended NAIC’s Spring National Meeting on March 15-18, where he had the opportunity to strengthen NAIFA’s relationships with state regulators and industry trade partners, as well as advocate for key priorities affecting NAIFA’s members.

The NAIC Committees discussed multiple topics of interest to NAIFA, including:

• Life Insurance and Annuities
• Long-Term Care
• Artificial Intelligence
• Financial Literacy
• Homeowners Insurance

Additionally, as a non-voting board member of the National Insurance Producer Registry (NIPR), Roger had an opportunity to learn about and discuss NIPR’s ongoing achievements in helping producers comply with state-based regulations. Notably, NIPR is now offering resident and nonresident business entity licensing and renewals for insurance producers, agents, and brokers in New York and Washington. The expansion is a significant milestone, as NIPR now provides licensing services in all 50 states (as well as four U.S. territories).

The NAIC Summer National Meeting will be held August 12-16 in Chicago.

Life Insurance and Annuities

The Life Insurance and Annuities (A) Committee received an update on federal activity involving life insurance, including the Department of Labor’s harmful fiduciary-only ruling. NAIC previously submitted a comment letter outlining its concerns with both the substance of the proposal and DOL’s lack of coordination with state regulators. The changed regulatory landscape – 45 states have now adopted NAIC’s Suitability in Annuity Transactions Model Regulation (Model #275), which includes a best-interest standard for annuity sales – shows DOL’s proposal is counterproductive and unnecessary.

The (A) Committee also received an update on state and federal efforts to pass the Living Donor Protection Act (LDPA), legislation which seeks to prohibit life, disability, and long-term care insurers from discriminating against living organ donors based solely on their status as living organ donors, a policy position supported by NAIFA. NAIC has not previously taken a position on LDPA as the organization generally does not support policies that preempt state regulators’ oversight of insurance. However, the latest iteration introduced in Congress (HR 2923/SB 1384) places enforcement authority in state regulators’ hands, a positive development from NAIC’s perspective.

Additionally, it was reported that the Annuity Suitability (A) Working Group plans to resume its meetings to continue discussing questions regarding the safe harbor/comparable standards provision in Model #275. NAIC has found in its reviews that there are systemic deficiencies in the safe harbor provisions of Model #275 that need to be addressed by the Working Group.

Long-Term Care

The Senior Issues (B) Task Force received updates on public long-term care programs in California and Washington. In California, the Long-Term Care Insurance Task Force previously conducted and finalized studies on potential program designs for a public long-term care program, as well as an actuarial analysis assessing the cost and viability of the proposed designs. To date, the California Legislature has not taken any action on the Task Force’s recommendations, and it remains unclear what, if any, steps the state will take to create a public long-term care program. Meanwhile, in Washington, the WA Cares Fund, a product of 2019 legislation, created the LTSS Trust Commission. The Commission’s report reached a set of recommendations on the structuring of a supplemental LTCi market, organized into six different areas: 1) consumer protection; 2) a venue for filing notices; 3) a benefit trigger and elimination period; 4) transition issues for near-retirees; 5) continuity of covered care setting and providers; and 6) coordination of benefits between the WA Cares Fund and supplemental LTCi policies.

The Long-Term Care Insurance (B) Task Force received a report on industry trends that could impact the solvency of long-term care insurance companies and reserves. Trending topics now and in the immediate future include cost-of-care inflation on inflation-protected products, morbidity and incidence improvement, rate increase approvals, and the performance of assets supporting LTCi business. The (B) Task Force also agreed with the Long-Term Care Actuarial (B) Working Group’s ongoing development of an LTCi multi-state unified rate review approach, which would provide a single methodology to incentivize state regulators who are currently reluctant to engage on the matter.

Artificial Intelligence

NAIC continues actively working to encourage all states to adopt its December 2023 AI Model Bulletin, Use of Artificial Intelligence Systems by Insurers. As part of these ongoing efforts, the Big Data and Artificial Intelligence (H) Working Group is planning to release a Model Bulletin state adoption map that will show the progress of adoption nationally. To date, six states have already adopted the Model Bulletin, with additional states expected to do so soon. NAIC is currently performing a detailed analysis of how states have adopted the Bulletin and will provide a reference grid as a guide that will help other states as they move through the process. Increased adoption of the Model Bulletin will be one of NAIC’s priorities in 2024 and 2025.

The Innovation, Cybersecurity, and Technology (H) Committee received an update on federal activities related to AI. Proposed bills in Congress have focused on various aspects of AI, from financial risk to transparency, governance, and environmental impacts. One bill, the AI Foundation Model Transparency Act, directs federal agencies to create standards for transparency in training data and algorithms used in AI tools. Companies creating AI tools would be required to share with consumers and regulators information on how data is used and collected.

Financial Literacy

The Special (EX) Committee on Race and Insurance talked at length about the importance of financial literacy initiatives, a policy position strongly supported by NAIFA. A presentation during the (EX) Committee meeting highlighted that financial literacy plays a critical role in decreasing poverty and inequality and that it promotes economic mobility by equipping younger individuals with the knowledge to make sound financial decisions. Currently, more than 20 states have passed laws requiring high school students to complete financial literacy education prior to graduation, a number that is expected to grow over the next few years. NAIC’s Life Workstream introduced a draft endorsement supporting state legislation requiring a financial literacy course as a prerequisite to graduation.

Homeowners Insurance

The Property and Casualty Insurance (C) Committee received an update on the challenging and widespread affordability issues in the homeowners’ insurance market, where increased premiums and non-renewals are a major obstacle for both consumers and businesses. Both state and federal governments are active in trying to mitigate the issue. At the state level, Hawaii has proposed a working group to study the feasibility of a state-run reinsurance program to offset the liabilities of private reinsurance companies. Idaho introduced legislation proposing to create a wildfire reinsurance program, while Florida is expanding a program that would provide an additional $200 million to homeowners to weatherize their homes. Industry feedback during the meeting recommended that future conversations of the (C) Committee focus on the role of land use planning and building codes as important contributors to market instability. Others suggested that non-renewal notices should be greater than 30 days, which is the notice requirement of the Unfair Trade Practices Act and NAIC’s guidance. In California and Colorado, for example, the non-renewal notice is 75 days and 60 days, respectively.

 NAIFA Staff Contact: Roger Moore – Policy Director – Government Relations, at rmoore@naifa.org.