Nearly 90 Pages of Objections Prompt US Insurance Regulators to Review Ratings Framework

Key Facts

A draft by the National Association of Insurance Commissioners to assess credit rating providers is under review after regulators received nearly 90 pages of objections, according to Insurance News Net. The association had released a revised version of its due diligence framework for public comment and set October 26, 2026, as the deadline for submissions. Available materials do not document a formal withdrawal of the proposal; the working group’s page still describes the framework as a draft under development and open to comment. Rather than announce a final decision, regulators said they would take no action before reviewing the comments and working with their staff and counsel to prepare a revised version. The dispute centers on how to examine rating agencies without imposing a uniform methodology or treating differences in their ratings as automatic evidence of deficient analysis.

The framework matters because of the role ratings play in insurers’ regulatory system: companies rely on them to determine regulatory designations and risk-based capital requirements, according to Insurance News Net. The association says it continues to rely on rating agencies for most asset classes, while reducing that reliance for some categories, including residential and commercial mortgage-backed securities subject to financial modeling. Under the filing exemption system, a security in most cases automatically receives the association’s designation equivalent to the rating of a recognized provider, according to a memorandum from law firm Mayer Brown. The system dates to 2004, when it was created as a less burdensome alternative to independently assessing the risk of every fixed-income security owned by US insurers. The association’s summary said more than 152,000 securities relied on ratings from rating providers in 2024, illustrating how widely these assessments are used in the regulatory process.

The association says the working group’s task is to improve the filing exemption process through the ongoing application of the due diligence framework and to strengthen the consistency and suitability of the association’s designations for solvency purposes. The proposed framework has four parts: defining the scope of the assessment, estimating risk, detailed testing procedures, and governance. But the revised version, according to Mayer Brown, does not ask ratings providers to adopt a uniform methodology; it focuses instead on the reasonableness of ratings and their suitability for regulatory purposes. The working group’s chair said the proposal “is not intended to make the association a regulator of rating agencies,” but to make it “a more responsible and informed user” of ratings. This defines the scope of the dispute as how ratings providers are examined and their results used, rather than replacing their methods with a single rating methodology.

The American Council of Life Insurers objected to elements it said remain undeveloped, including how securities should be segmented, how yield spreads should be compared, and which standards should trigger corrective action. These details matter because they determine in practice how ratings quality will be measured and when a correction to the assessment process will be required. Fitch recommended that assessments of rating agencies draw on historical default and rating transition data, consistent with Securities and Exchange Commission oversight and banking regulators’ practices. Kroll Bond Rating Agency, meanwhile, supported a structured, risk-based framework and warned that differences among ratings providers “should not automatically be considered evidence of weak analysis.” The two positions reflect a debate over how to build comparable standards while preserving differences in analytical judgments among agencies.

Assessment becomes more difficult in newer asset classes, customized investments and private credit, where working group members acknowledged recurring concerns because of limited historical performance data, according to Insurance News Net. The absence of a long performance record makes it less direct to compare risk expectations with actual outcomes, an issue tied to regulators’ ability to test ratings in these categories. The working group met on August 12 and then on October 1, 2026, and released a revised version for public comment at its latest meeting, according to Mayer Brown. Before that, it published an initial working paper prepared by PricewaterhouseCoopers on May 4, 2026, with a 60-day comment period. The group aims to complete the due diligence framework and adopt it before the end of 2026, but the adoption date remains tied to reviewing comments and preparing the revised draft.

The Ratings Provider Working Group is scheduled to hold its next meeting during the association’s Fall National Meeting on November 15, 2026, according to the association’s calendar. The meeting follows the end of the public comment period on October 26 and the objections that Insurance News Net reported totaled nearly 90 pages. Regulators said they would work with their staff and counsel to prepare a revised draft before taking any action on the proposal. Changes to provisions on securities segmentation, yield spread comparisons and corrective action standards will be among the main issues to resolve in the next draft. The announced next step remains a review of the comments and preparation of a revised version, while the goal of adopting the framework before the end of 2026 remains in place, according to Mayer Brown.