Insurers and regulators are debating whether to reopen the Triple-X model life insurance reserve regulation.[@@]
Supporters of opening up the model include 3 large mutual insurers, but the majority of life insurance company representatives who spoke about the subject here at the recent fall meeting of the National Association of Insurance Commissioners, Kansas City, Mo., opposed the idea of revisiting the model.
The insurers that want to reopen the model are Guardian Life Insurance Company of America, New York; New York Life Insurance Company, New York; and Northwestern Mutual Life Insurance Company, Milwaukee. The companies that want to reopen the model say some companies are gaming the system. But 10 other life insurers signed a letter opposing the idea of reopening the model.
The NAIC adopted the Triple-X model, officially known as Actuarial Guideline 38, the Application of the Valuation of Life Insurance Policies, in March 1999, to ensure proper reserving for level premium term and universal life products. The authors of the March 1999 revision wanted to regulate use of the shadow accounts in UL policies that kept policies in force and in effect provided long-term guarantees without companies setting aside the reserves that normally would be required for such extended guarantees.
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New York regulator Bill Carmello has developed one of the 3 major revision proposals. His proposal describes several products as being on regulators’ radar. One example is a policy with a 10-year level premium rate followed by increased guaranteed premiums for an additional 20 years. The issuing company could not increase premiums after year 10 unless a specific event occurred.
Some reactions at the NAIC meeting to calls for revising Triple X:
- Mike Batte, a New Mexico regulator: Batte said any gaming of the Triple X system is a compliance problem, and he says the current guidance already lets states adopt aggressive enforcement practices.