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The American Council of Life Insurers, Washington, says that it will weigh in on reserving and capital requirements, investor-owned life insurance and the Terrorism Risk Insurance Act during a summer national meeting of insurance regulators.
When the National Association of Insurance Commissioners meets in Boston this week, those issues along with a discussion of market conduct analysis and a fingerprint database for producers and possibly CEOs, will be monitored by the trade group.
Paul Graham, ACLI vice president-insurance regulation and chief actuary, says that reserving and capital requirements for variable annuities, is important for the ACLI because it is the first of the life products that is being considered in an effort to rely more on principle-based reserving rather than just on strict formulaic based requirements.
A key to the issue, he says, is to ensure tax deductions for reserves are maintained. ACLI believes that a proposal for a standard scenario that creates a minimum floor for reserving would retain that deduction, he adds.
The issue of the standard scenario, he adds, is that it appears to be well above the necessary floor. Indeed, during a recent discussion on the issue, a number of companies and a few insurance regulators expressed some reservation about making the standard scenario part of the reserving and capital adequacy formulas. Rather, according to the discussion, it was suggested that at least initially, the results from a standard scenario could be used for informational purposes.
Another actuarial issue that ACLI is monitoring is an AG 38 proposal for reserving for UL products with secondary guarantees. Graham says that ACLI is hoping that the NAIC will defer action until the ACLI’s board of directors meets on June 24.
Product and market conduct issues that ACLI will provide input on include investor-owned life insurance, says Linda Lanam, ACLI vice president-annuities and market regulation. ACLI will join with the National Association of Insurance and Financial Advisors and the Association for Advanced Life Underwriting, both in Falls Church, Va., in delivering testimony urging a resolution opposing the expansion of insurable interest laws. The National Conference of Insurance Legislators, Troy, N.Y., already has adopted such a resolution.
Lanam says that ACLI is also in interested in a discussion with regulators on the process for changing elements of market conduct data that is part of the market conduct analysis process.
Michael Lovendusky, ACLI associate general counsel, says that ACLI will urge regulators to individually discuss with federal state representatives, the importance of renewing the TRIA. The NAIC has lobbied for TRIA’s renewal but it is important for group life writers that federal officials understand “the impossibility of underwriting a terrorist attack.”
ACLI will also be monitoring the NAIC’s Criminal History Record Check Model Act, Lovendusky says. Concerns include both a requirement for insurance company officers and directors to submit fingerprints to a fingerprint database and the control of that database, he says.
If the National Insurance Producer Registry controls the database, it is compliant with the Federal Fair Credit Reporting Act and state requirements, he says. If control of the fingerprint database falls under the purview of the State Producer Licensing Database, then they might not enjoy these protections, he adds.