ACC urges enhanced look-through approach for NAIC collateral-loan RBC reform

The Alternative Credit Council submitted comments supporting the NAIC proposal to replace the historic 6.8 percent uniform RBC factor for collateral loans with differentiated charges based on underlying collateral type, calling the reform a significant step toward a more risk-sensitive framework. ACC recommends that mortgage-backed collateral loans receive look-through treatment using the same tiered factors applied to directly held mortgages, consistent with the 2024 interim solution for loan-on-loan structures. The letter notes insurers possess the loan-level data and proposes a fallback 3.0 percent CM3 factor when information is unavailable, ensuring conservatism while aligning capital with risk and supporting insurer investment.