Climate and cyber risks, as well as protection gaps and transparency among the National Association of Insurance Commissioners (NAIC), priorities for 2024.
The NAIC has recently announced its strategic priorities for the year and stated they are equipped to take on the shared challenges and responsibilities of a more interconnected world.
The association runs a state-based system of insurance regulation in the United States and provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers.
Andrew N. Mais, NAIC President and Connecticut Insurance Commissioner, said: “Built on the foundation of coordination, cooperation, and collaboration, the state-based insurance regulatory system is well equipped to keep taking on the shared challenges and responsibilities of a world more interconnected than ever before.
“The NAIC’s regulatory priorities for 2024 reflect our commitment to pursuing innovative and effective solutions to the most pressing issues affecting consumers, the insurance sector, and markets.”
NAIC 2024 priorities include climate risks/natural catastrophes and resilience. The organisation considers mitigation, consumer education, and closely working together central to tackling the threat posed by increased climate risks.
The NAIC’s proposed National Climate Resilience Strategy for Insurance provides for a unified approach, data collection and utilisation, and resiliency actions, including the launch of a comprehensive NAIC Climate Risk Dashboard to measure and evaluate protection gaps.
Among its actions, the NAIC will also seek to create new resilience tools, advocate for pre-disaster mitigation funding, and develop scenario analysis resources for state regulators, the organisation noted.
Insurer financial oversight and transparency is another of NAIC’s priorities for this year. As the organisation aims to enhance oversight and adapt to evolving investment strategies it launched the “Framework for Insurer Investment Regulation”.
This framework aims to reduce blind reliance on credit rating providers and modernise the role of the NAIC’s Securities Valuation Office.
Other strategic items include developing a modernised Economic Scenario Generator, as well as continuing to implement the Asset Adequacy Testing framework (AG 53) to bring greater transparency and precision to the assessment of cash flows for insurers’ structured securities holdings.
The NAIC is also prioritising the marketing of insurance products as it aims to protect consumers from deceptive and misleading insurance marketing, noting that state insurance regulators will once again take a multipronged approach to this.
According to the NAIC, state insurance regulators not only will coordinate with Congress and federal agencies, they will also strengthen information sharing among their departments and develop a tool hosted at NAIC.org for consumers to check insurance producers’ licences and additional information.
Additionally, the NAIC would look to modify model laws to grant regulatory power over health insurance lead generators. To further assist consumers and help close the protection gap for older adults, the NAIC continues to call for Congress to restore states’ regulatory authority over the Medicare Advantage market.
Regarding race and insurance as well as financial inclusion and protection gaps, the organisation stated its dedication to leading in each of these critical areas.
It also claimed it will continue to identify related issues in 2024, focus on closing protection gaps and widening financial inclusion, receive updates, and recommend statutory or regulatory changes.
Its final priority is regarding the use of artificial intelligence (AI) and cyber risks, as their rapid development not only creates opportunities but also raises questions regarding consumer privacy, cyber risk, carrier needs and capabilities, and the complexity of the regulatory landscape.
Its agenda including facilitating educational and engagement opportunities and leading key projects and efforts to monitor and support adoption of the Model Bulletin on the Use of Artificial Intelligence Systems by Insurers.
It also aims to research and monitor trends, proposing a regulatory framework for overseeing third-party data and predictive models, and completing the development of the Cybersecurity Event Response Plan.
Through the NAIC’s Privacy Protections (H) Working Group, state insurance regulators are focusing on the future of safeguarding consumers’ sensitive information through modernised and enhanced privacy protections.
