In the NAIC model for life insurance companies,this risk measures the liquidity of liabilities for given rate changes.

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The NAIC model for life insurance companies identifies interest rate risk as the risk that measures the liquidity of liabilities for given rate changes. This refers to the vulnerability of a life insurance company's assets and liabilities to changes in interest rates. With interest rate risk, the value of a life insurer's liabilities can change due to fluctuations in interest rates, which can impact the liquidity of their assets. As such, life insurers are exposed to the risk of not being able to meet their obligations to policyholders if interest rates move in an adverse direction, making it difficult for them to settle claims, convert policies to cash, or generate returns on their investments. Therefore, interest rate risk is a critical risk factor that insurers need to manage effectively to ensure their long-term sustainability.

In the NAIC Model for Life Insurance Companies,this Risk Measures