National Association of Insurance Commissioners. The National Association of Insurance Commissioners (NAIC) is governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories to coordinate regulation of multistate insurers. The NAIC develops legal, financial, and organizational standards for insurance regulators through its accreditation process.

Insurance Holding Companies. An insurance holding company is a system that consists of two or more affiliated persons, one of which is an insurer. Every insurer authorized to do business in this state that is a member of a holding company system is required to be registered with the Office of the Insurance Commissioner (OIC) unless they are subject to substantially similar requirements where they are domiciled.

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National Association of Insurance Commissioners Model Acts for Insurance Group Supervision. The NAIC?s Insurance Holding Company System Regulatory Act, #440, and Insurance Holding Company System Model Regulation with Reporting Forms and Instructions, #450, provide state insurance departments with a framework for insurance group supervision. The intent of the act is to provide a stronger domestic legal structure under which holding companies are supervised.

Within the last couple of years, NAIC adopted revisions to model acts applicable to insurance holding companies. The 2020 revisions create a group capital calculation (GCC) and liquidity stress test (LST) to provide U.S. regulators with additional tools for conducting group-wide supervision and help understand the financial condition of non-insurance entities. The GCC satisfies group capital assessment requirements of the covered agreements with the European Union and United Kingdom. A LST provides insights into the financial health and risks monitored by the U.S. Treasury, and requires insurers to file the results of a specific year?s LST to the state insurance commissioner.

Model Act revisions made in 2020 will become an NAIC accreditation requirement, effective January 1, 2026.

The 2020 revisions to the NAIC Holding Company Act, #440, and Model Regulation, #450?are incorporated into Washington State's Insurer Holding Company Act.

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Tools to Test for Solvency in Insurance Group Supervision. Every insurer authorized to do business in this state who is a member of an insurance holding company shall file an annual GCC with the OIC at registration, concurrently with other necessary information. If scoped by the NAIC's LST framework, LST results may also be required at registration. The report of the GCC and LST must be completed in accordance with NAIC's instructions.?

GCC and resulting group capital ratio as well as LST results and supporting disclosures are not intended as a means for ranking insurers or insurance holding companies. Publishing, or otherwise communicating to the public the results of the GCC or LST is prohibited except in instances to rebut a materially false statement.

Confidentiality Relating to Information from a Group Capital Calculation and Liquidity Stress Test. The OIC shall maintain confidentiality of GCC and the group capital ratio produced within an insurance holding company's calculation or the LST and supporting disclosures and other information from the insurance holding company.?

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The OIC may share and receive confidential information with third party consultants designated by the commissioner provided that the recipient agrees in writing to maintain the confidentiality and the privileged status of the information; ensures the information is not stored in a permanent database after the underlying analysis is completed; and consents to intervention or notification to an insurer under certain circumstances.