The 2025 National Association of Insurance Commissioners (NAIC) President and North Dakota Insurance Commissioner Jon Godfread has stated that:
“As state insurance regulators and NAIC Members, our efforts are anchored by two core principles: maintaining fair, sound, and stable insurance markets, and protecting and educating consumers.”
One of the stated four 2025 NAIC initiatives[1] is:
- Ensuring Resilience, Relevance, and Prosperity for Generations to Come: Strengthening financial governance, addressing regulatory arbitrage risks, and modernizing the Risk-Based Capital (RBC) framework will address the demands of the rapidly evolving market. Additionally, advancing financial literacy will reinforce the essential role of insurance in personal and community financial health.
In furtherance thereof, on February 20, 2025, the NAIC announced that the RBC Model Governance (EX) Task Force will be led and co-chaired by Wisconsin Insurance Commissioner Nathan Houdek and Ohio Department of Insurance Director Judith French. Commissioner Houdek explains that “The extended low-interest rate period that followed the Great Financial Crisis created an industry trend to search for yield in investment portfolios, resulting in a major shift in the complexity of insurers’ investment strategies, resulting in more liquidity risk than historically seen.”[2] Consequently, the NAIC is focused on modernizing and updating the RBC formulas and related governance.
The RBC Model Governance Task Force’s goals are to:
- Develop a set of guiding principles for the RBC framework to ensure a consistent approach to future adjustments. These principles will serve as a strategic foundation to ensure that all revisions to the RBC framework are enhancements that uphold its integrity, adaptability, and global competitiveness and further the principle of “Equal Capital for Equal Risk.”
- Complete a comprehensive gap analysis and consistency assessment to identify and inventory gaps that exist and establish a plan for addressing identified gaps and potential inconsistencies that improve the framework.
- Oversee the development of an education and public messaging campaign to highlight the benefits and strengths of the RBC framework as an important part of the U.S. state-based insurance regulatory system.
- Create a process for analyzing both retrospective and future adjustments to RBC, incorporating regular reviews of RBC outcomes and ensuring future adjustments are made in alignment with guiding principles. This process will facilitate ongoing improvements to ensure the framework remains responsive to emerging risks and market trends, enabling the RBC framework to adapt proactively.
The 2025 membership of the RBC Model Governance (EX) Task Force consists of the following states:
Ohio (co-chair), Wisconsin (co-chair), Iowa (co-vice chair), South Carolina (co-vice chair), Colorado, Connecticut, District of Columbia, Florida, Idaho, Maine, New Hampshire, North Carolina, North Dakota, Texas, Virginia, and Washington.
[1] https://content.naic.org/article/naic-announces-2025-initiatives
[2] https://content.naic.org/article/naic-executive-committee-launches-risk-based-capital-task-force-improve-governance
