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Regulation and Compliance > State Regulation

CSO Model Reg Fine-tuned By Regulators

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Several significant changes were made to a draft model regulation that is the framework for putting new Commissioners Standard Ordinary Tables in place.

The American Academy of Actuaries, Washington, in conjunction with data provided by the Society of Actuaries, Schaumberg, Ill., presented regulators with a final version of new 2001 CSO Tables during the June meeting of the National Association of Insurance Commissioners, Kansas City, Mo.

In order to make those tables, which are waiting final NAIC approval, operational, a regulation must be put in place in states.

Regulators voted to make the following changes to that draft regulation, the 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model Regulation.

One controversial provision that was removed was a proposed requirement to make companies contribute data to future mortality table studies conducted by the SOA in order to be able to use the 2001 CSO Tables.

Although regulators said that the data is important and future Tables would be weaker if sufficient data could not be ensured, it was stated that a regulation was not the place to require adequate collection of data.

Rather, regulators such as Frank Dino, a Florida life actuary with the Florida insurance department, said that there needs to be more reliance on the professional judgment of the actuary.

However, other regulators such as Allen Elstein of Connecticut noted that although he can see the potential difficulty with requiring participation in a study that is not required by law, he is not certain that leaving authority solely to actuarial judgment is the answer.

A second point that the tables of the AAA be included for gender blended tables, tables that include mortality data for both sexes, was adopted by regulators. The decision pitted concern that requiring the tables would take up storage space on computers against the need for those tables. Advocates of including the tables such as Jim Van Elsen of Van Elsen Associates in Pella, Iowa, said that it would help create standard results rather than leaving leeway for companies to come up with different reserving answers.

Reproduced from National Underwriter Life & Health/Financial Services Edition, July 29, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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