HB78 Alabama 2022 Session

Updated Feb 22, 2026

Summary

Primary Sponsor: Kerry Rich
Republican
Session: Regular Session 2022
Title: Insurance Dept., life and annuity policies, standard nonforfeiture law for individual deferred annuities, group capital calculation and stress test, providing for holding companies, duties to Commission and lead state commissioner, small company alternative valuation provision, exemptions, exemption premium based on valuation manual of NAIC, Commissioner of Insurance may regulate by rule, Secs. 27-15-28.2, 27-29-1, 27-29-3, 27-29-4, 27-29-7, 27-36A-20 am'd.
Summary: HB78 updates Alabama’s life insurance and annuity rules to lower nonforfeiture guarantees for individual deferred annuities, create group capital and liquidity testing for insurance holding companies, and update valuation standards and exemptions for small insurers.
What This Bill Does
It lowers the minimum interest rate used to calculate nonforfeiture benefits for individual deferred annuities to 0.15% and exempts contingent deferred annuities from the standard nonforfeiture law, with the Commissioner allowed to set contingent benefits by rule. It creates a group capital calculation and a liquidity stress test framework for insurance holding company systems, to be filed with the lead state commissioner, using NAIC guidelines, while keeping these group-related numbers confidential. It updates the Standard Valuation Law so reserves for life and annuity products are valued using the valuation manual for new policies and adds exemptions for small insurers based on an exemption premium formula. It also clarifies that the Commissioner may regulate by rule and sets confidentiality and data-sharing provisions for regulators and NAIC-related activities.

Who It Affects
Policyholders and owners of individual deferred annuities in Alabama, who may experience changes to nonforfeiture guarantees and the handling of contingent deferred annuities.
Insurance holding company systems and Alabama-based insurers (including ultimate controlling persons and governing boards) who must file annual group capital calculations and liquidity stress test results, may receive certain valuation exemptions, and are subject to enhanced regulatory reporting and confidentiality provisions.

Key Provisions
Section 27-15-28.2 amendments: reduce minimum interest rate for nonforfeiture calculations to 0.15%; exempt contingent deferred annuities from the standard nonforfeiture law; authorize the Commissioner to adopt by rule the nonforfeiture benefits for contingent deferred annuities.
Sections 27-29-1, 27-29-3, 27-29-4, and 27-29-7 amendments: revise the Alabama Insurance Holding Company System Regulatory Act to require a group capital calculation and a liquidity stress test, follow NAIC instructions, and maintain confidentiality of group capital and liquidity test information; establish filing with lead state commissioner and include exemptions and consolidated filing options.
Section 27-36A-20 amendments: update Standard Valuation Law to require reserves for new policies to use mortality and interest assumptions from the valuation manual; create exemptions for small insurers based on 'exemption premium' calculations; specify filing and continuation rules for exemptions and outline exclusions (e.g., certain UL policies); permit regulator-regulated rulemaking to implement these changes.
Regulatory framework and confidentiality: the bill preserves strict confidentiality for group capital, liquidity stress test data, and related documents, while allowing sharing with NAIC and designated third-party consultants under written agreements and defined protections.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Insurance