Academy’s Work on VM-22 Shows Its Value as a Key NAIC Partner

By Amanda Barry-Moilanen 
Policy Project Manager, Life 

The cornerstone of the Academy is its thoughtful, nonpartisan work on public policy, with each practice council contributing in different ways. 

For the Life Practice Council (LPC), our greatest policy impact comes from engagement with the National Association of Insurance Commissioners (NAIC). The LPC, through continued work on a seemingly endless list of policy issues, has developed strong relationships with NAIC regulators and staff that ensure the practice council has a seat at the table during complex policy discussions.  

The LPC’s relationship with the NAIC is critical because of the state-based regulatory regime for life insurance in the United States. The nation’s state-based model for regulating life insurance is unique in that it is consumer-focused and innovative at a more localized level, while also allowing for national coordination on critical issues. The Academy’s reputation for being independent and objective allows LPC volunteers to engage with the NAIC on an almost constant basis across a variety of policy topics including principle-based reserving (PBR), risk-based capital, the Generator of Economic Scenarios project, offshore reinsurance, and more.  

Recently, the expertise and leadership of Academy volunteers were showcased in the NAIC’s efforts to codify principle-based reserving for non-variable annuities (including fixed-indexed, payout, and indexed annuities) in section 22 of the NAIC’s Valuation Manual. This VM-22 project, which essentially provides a rulebook for actuaries on how to set aside money for non-variable annuities under the PBR framework, involved significant Academy collaboration. 

The Annuity Reserve and Capital Subcommittee (ARCS) provided feedback to the VM-22 Subgroup during every step of the drafting process. The Academy co-sponsored the VM-22 Field Test along with the NAIC and the American Council of Life Insurers (ACLI), with consultant EY compiling and analyzing the results. At the request of the NAIC, ARCS and the Academy’s research department developed the field test specifications that were used for its deployment. In addition to their support of the field test, ARCS also provided numerous comments to the VM-22 Subgroup throughout the drafting process for VM-22.  

 Companies were encouraged to apply the new rules to a sample of their products and provide the results to the VM-22 Subgroup so that regulators could see if any further adjustments were needed before final adoption. After thorough testing, LATF moved forward with making the rules mandatory across the industry, and the final draft of VM-22 was adopted earlier this year and takes effect Jan. 1, 2026.  

It is because of the decades-long relationships that LPC volunteers and Academy staff have cultivated with the NAIC that their regulators are confident in the LPC to support extremely complex, billion-dollar projects with industry-wide implications. Academy staff and volunteers alike, especially in life insurance, maintain regular touchpoints with the regulators working on life actuarial issues to ensure that we are providing the support they need to make informed policy decisions.  

VM-22 is a great example of how Academy leadership and expertise ultimately strengthen the trust between the Academy and the policymakers who we support. Continuing to provide thoughtful, unbiased actuarial commentary to the NAIC helps ensure that our relationship with it endures for years to come.