The interconnected investment oversight framework, with Risk-Based Capital (RBC) as a central component, was again at the center of the National Association of Insurance Commissioners (NAIC)'s 2026 Spring National Meeting in San Diego, California. As highlighted in the NAIC President Scott White's March 23, keynote address, there has been significant progress, much of it under the rubric of the Insurer Investment Framework adopted in 2024, making sure the framework keeps pace with how insurers are investing, accounting for newer or emerging asset classes, and offshore reinsurance arrangements.
The national meeting moved several strategic initiatives forward, including the commissioners' desire to develop a process to prioritise updates to the framework and to tactical initiatives, such as developing a model to differentiate Life RBC treatment of collateral loan obligations (CLOs) and ongoing efforts to increase transparency with private assets investments.
Moving strategic initiatives forward
The March 24, 2026, meeting of the RBC Model Governance (EX) Task Force had commissioners explore potential governance and process for updating RBC, along with a review of responses to the February 10, Request for Comments on RBC Gaps and Inconsistencies across the Life, Property & Casualty, and Health RBC formulas and their components (Attachment Three). The task force was formed in 2025, with charges (i.e., mandates) that commissioners have embraced as they deliberated on how the NAIC can strengthen governance without complicating efforts to revise RBC, ensuring technical revisions to guidelines align with policy objectives, and standardising information so priorities can be assessed consistently.
The discussion dovetailed with common themes from comment letters on governance and process, including those advocating the establishment of a clear and durable governance framework for evaluating and prioritising RBC changes, and those calling for greater transparency, stronger documentation, and a more disciplined process, concepts that underpin the RBC Principles adopted by the task force in 2025. While no hard conclusions were reached, the chair provided direction, suggesting further exploration of the issues over the next few months.
Moving tactical initiatives forward
In parallel, several significant tactical initiatives have moved forward since the Fall National Meeting in Florida at the end of last year, with key developments including:
- RBC CLO: The American Academy of Actuaries is in the final stages of developing its Life RBC CLO model, which has been exposed for comment. It includes a proposal to modify the RBC structure to incorporate tranche thickness for CLOs, rather than rely solely on agency ratings; as thin tranches are otherwise more likely to incur significant losses upon impairment. For several years, regulators and market participants have debated whether traditional bond factors are an adequate proxy for CLO risk. The latest work suggests the NAIC is now moving toward implementing a solution, although possibly in phases, as it contemplates whether RBC should be differentiated by tranche thickness or whether the effect is better captured by differentiating rating agency methodologies, with some that account for tranche thickness and others that do not. Regardless, the current state of consensus is a significant milestone for the years-long effort.
- Heightened oversight with private and less-transparent assets: Sustained growth in less traditional asset classes has reinforced regulators' focus on heightened transparency, data quality, and the risk of overreliance on ratings that are less visible to the market. Privately rated debt, for example, has increased by almost 50% in 2025 alone, reaching roughly 12K issues. Regulators have continued to move toward heightened disclosure; for example, privately rated debt requires an accompanying rating rationale report. More broadly, regulators have heightened governance on private assets and how agency ratings are used in the NAIC Designation process. Since the Fall National Meeting, the NAIC has advanced disclosure initiatives for private placement securities and has moved forward with projects tied to agency rating due diligence, NAIC staff discretion over agency rating-based designations, and the treatment of affiliated and related party transactions.
- Assets supporting reinsurance transactions: The NAIC has continued to build a more comprehensive framework governing asset-intensive reinsurance transactions, particularly assets supporting modified coinsurance (ModCo) and funds withheld (FWH) structures, with a continued move toward improved reporting, accounting refinements, and disclosure in reserving. These initiatives are increasing visibility into which assets support ceded reserves and related RBC offsets, while also laying the groundwork for possible future guardrails that could extend beyond disclosure-only requirements.
What's next?
The NAIC's transformation of the investment regulatory framework is no longer aspirational, as it has evolved into a functioning architecture, though still incomplete. Governance over RBC is being formalised. Oversight of agency ratings is being reworked. CLOs, private assets, funds, and other investments are all moving deeper into the regulatory spotlight.
The opportunity is significant. A more coherent framework could better align risks, reduce blind spots, and enhance regulators' tools to monitor a market that has evolved well beyond the assumptions embedded in older rules. But the complexity is just as significant. Every change creates knock-on effects for reporting systems, valuation methods, portfolio construction, and capital planning. What to watch next is not just the substance of individual proposals, but their combined effects.
* Amnon Levy serves as the CEO of Bridgeway Analytics, which supports insurers and their regulators in navigating capital markets and their regulatory landscapes.
Disclosure. The NAIC is engaging Bridgeway Analytics to help develop an RBC model governance framework. Bridgeway's role is to help collect and synthesize viewpoints, which may include Bridgeway's own, for the NAIC committees to choose ultimately.