March 17, 2025 - The NAIC’s Risk-Based Capital (RBC) Model Governance Task Force held a call today to adopt its proposed 2025 charges, which were exposed for comment in February. The Task Force is responsible for developing guiding principles for updating the NAIC’s RBC formulas to address current investment trends with a focus on enhancing RBC precision for asset risk.
The charges include: 1) developing a set of guiding principles for the RBC framework to ensure a consistent approach to future RBC adjustments; 2) completing a gap analysis and consistency assessment to identify and inventory gaps that exist and establish a plan for addressing them; 3) overseeing the development of an education and public messaging campaign to highlight the benefits and strengths of the RBC framework; 4) facilitating and overseeing coordination and alignment among all NAIC committees/task forces/etc. related to this initiative and implementation of the guiding principles; and 5) creating a process for analyzing retrospective and future adjustments to RBC.
The following questions will be addressed under the guiding principles:
- When should a particular risk be addressed in the RBC model?
- What level and type of data and analysis are needed to support the setting of capital factors?
- How should new and emerging risks and asset types be treated if a capital framework has not yet been developed for them?
- What level of statistical safety is to be targeted by the model or, if not, a single target, and how should such tailored safety targets be determined?
- When should the calibration of risks to capital factors be re-evaluated?
The Task Force will convene again next week at the NAIC Spring National Meeting in Indianapolis. It will provide information on next steps at that time.
