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Regulation and Compliance > State Regulation

Regulators Fine-Tune CSO Model Reg

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NU Online News Service, July 25, 1:52 p.m. – Members of the National Association of Insurance Commissioners, Kansas City, Mo., have made two significant changes to the draft of a model regulation that creates a framework for implementing the new Commissioners Standard Ordinary Tables.

Regulators removed one provision that would have required insurers using the 2001 CSO Tables to contribute data to future mortality table studies conducted by the Society of Actuaries, Schaumburg, Ill.

Regulators also decided to adopt a proposed provision that would require insurers documenting reserve and nonforfeiture calculations to include the “gender-blended tables,” or tables that provide mortality figures for both sexes, from the American Academy of Actuaries, Washington, rather than simply including a note referring readers to the gender-blended tables.

The decisions affect the draft of the NAIC’s 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model Regulation

Representatives from the American Academy of Actuaries used data from the Society of Actuaries to present a final version of the new 2001 CSO Tables to regulators during the NAIC’s recent summer meeting.

Most states need to adopt regulations to put the new tables into effect, and most are likely to base their regulations on the NAIC model.

Advocates of the data-contribution requirement argued that future mortality tables will be weaker if actuaries cannot get enough data to compile the tables, but opponents said a regulation for implementing the 2001 CSO Tables is not the right vehicle for ensuring adequate availability of data for future tables.

Regulators need to place more reliance on the professional judgment of the company actuaries, according to Frank Dino, a life actuary with the Florida Department of Insurance.

Allan Elstein, a Connecticut regulator, said he was not certain that leaving participation in mortality studies solely up to actuarial judgment was the answer, although he conceded that he could see the potential difficulty of requiring participation in a study that is not required by law.

Supporters and critics of the gender-blended table provision debated whether requiring the tables would take up too much computer storage space.

Advocates of including the tables, such as Jim Van Elsen of Van Elsen Associates, Pella, Iowa, said keeping the tables in would help lead to standard results, while leaving the tables out might give insurers leeway to come up with different reserving answers.