Modernizing the NAIC’s investment risk oversight framework

Efforts to revise the NAIC investment risk oversight framework are moving forward on several fronts. The Financial Condition (E) Committee formed a Drafting Group of regulators, which has mapped out a Workplan. The Workplan includes an assessment of a significant expansion of the NAIC’s analytical capabilities through centralized investment expertise (CIE). The effort acknowledges that the SVO currently limits its focus on credit risk, highlights regulators’ needed understanding of macroprudential and emerging risks, as well as needed guidance on policy design. In addition, the E-Committee is petitioning for the development of a request for proposal (RFP) to engage a consultant who would help the NAIC develop a due diligence program over the ongoing use of agency ratings.

This report reviews these developments and relates them to workstreams at the NAIC, which continue in parallel.

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