Reserving requirements for variable annuities with guarantees would be most effectively accomplished through a guideline, regulators say.
The decision to pursue a guideline followed a discussion among regulators at the National Association of Insurance Commissioners about whether a company could refuse to reserve using the new standards.
Regulators and insurers currently are putting in place reserving and capital requirements for VAs with guarantees.
The concern over enforcement, according to discussions, is that the new proposal differs in approach from the Standard Valuation Law that currently is used to determine reserving for annuities, including VAs with guarantees.
According to Katie Campbell, a regulator representing Alaska, the new reserving standards are fundamentally different from the current standards, the Commissioners Annuity Reserve Valuation Method.
The SVL could be changed if necessary, with the guideline remaining in effect after the change was made in order to offer guidance on how to comply with the law, she added. Remaining true to the principle as well as a computation based on the SVL is also important, she said.