2024 Health Meeting VIRTUAL - Session 3B: Capital Motivated Reinsurance in the Context of Health RBC Formula Updates 7.24.24 Recording

The National Association of Insurance Commissioners (NAIC) is working on changes to the health risk-based capital (RBC) formula. Will your RBC ratio improve or deteriorate under the new formula? And what can you do about it? While it might be too soon to know exactly how these changes will affect your company’s RBC ratio, we’ll present what we know and discuss what you should expect. We will explore an important reinsurance solution for addressing surplus strain in relation to the new RBC standard, financing growth and supporting enterprise risk management strategy. Most of the available literature about capital-motivated reinsurance focuses on its use to address surplus strain in the life insurance space. We will address its applicability in the health space and provide useful knowledge and insight for health actuaries. At the conclusion of this session, attendees will be able to • Describe the types of health RBC formula changes the NAIC is considering and the likely timeline for and impact of those changes. • Discuss how health insurers can use capital-motivated quota share reinsurance to improve their RBC ratios. • Provide insights on how health plans are utilizing quota share reinsurance currently to strengthen their balance sheets and finance growth. • List the criteria for determining when this strategy may be appropriate.