The American Council of Life Insurers 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.[@@]
The ACLI, Washington, says it will monitor these issues when the National Association of Insurance Commissioners, Kansas City, Mo., meets in Boston this week. ACLI says it will also observe NAIC discussions of market conduct analysis and a fingerprint database for producers and possibly for chief executive officers.
Reserving and capital requirements for variable annuities are important to the ACLI because variable annuities are the first of the life products that are being considered in an effort to rely more on principle-based reserving rather than on strict formulaic reserving requirements, says Paul Graham, ACLI’s chief actuary.
A key to the issue is to ensure tax deductions for reserves are maintained, Graham says. ACLI believes that a proposal for a standard scenario that creates a minimum floor for reserving would retain that deduction.
The issue of the standard scenario is that it appears to be well above the necessary floor, he adds.
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, it was suggested that at least initially, the results from a standard scenario could be used for informational purposes, according to the discussion.
Another actuarial issue that ACLI is monitoring is an Actuarial Guideline 38 proposal for reserving for UL products with secondary guarantees. Graham says that ACLI hopes the NAIC will defer action until the ACLI’s board meets on June 24.