Nathan Houdek: We work with insurers that need assistance in interpreting our state statutes and codes to determine investments that are allowed in Wisconsin.
"We expect to continue to see changing investment vehicles and
increased complexities in this area."
As with all regulators, we are concerned with regulatory arbitrage that can take place by misclassifying investments to get a better Risk-Based Capital (RBC) charge. Looking ahead, we expect to continue to see changing investment vehicles and increased complexities in this area.
We do not expect to release any new investment-related regulations in the next year.
Nathan: Overall, Wisconsin domestic insurers tend to be conservative with their investment portfolios. We monitor issues that may arise in this area to ensure that our companies remain stable for their consumers.
We are concerned about risk and risk classification when it comes to the capital charge for structured securities and OCI serves as a member of the National Association Of Insurance Commissioners Risk-Based Capital (NAIC RBC) Investment Risk and Evaluation Working Group to stay abreast of changes that may impact Wisconsin.
"Through our involvement with the NAIC, we are monitoring changes
and getting a better understanding of structured securities."
Nathan: Our statutes provide some guidelines for what insurers can invest in. Through our involvement with the NAIC, we are monitoring changes and getting a better understanding of structured securities to evaluate the level of risk in various tranches.
We know our insurers are monitoring [ESG and Sustainability] and evaluating their options, but they generally maintain diverse insurance portfolios.
Nathan: The long period of low interest rates has concerned regulators and the insurance industry. Insurers have been modelling this potential increase in interest for years, however, so they have positioned themselves well to manage this environment.
