UL Reserve Rule Will Stay
The New York Department of Insurance most likely will maintain its strict universal life reserves regulation until the National Association of Insurance Commissioners reaches a consensus on the issue. [@@]
Howard Mills, New York insurance superintendent, made that assertion during a recent UBS Investment Research investor conference call, according to a report on the call written by Andrew Kligerman, the lead life sector analyst at UBS.
New York tightened UL reserve rules earlier this year by adopting an emergency amendment to a key state insurance regulation, Regulation 147.
“Mr. Mills said that by issuing Regulation 147, New York state effectively compelled the life insurance industry to deal with the universal life secondary guarantee reserving issue and to seek a viable long-term solution,” Kligerman writes in his report.
Although the regulation must be renewed every 60 days, Mills told UBS that he intends for it to remain in force.
Also in regard to reserving, Mills said he intends to move toward a more flexible, principles-based form methodology. New York is also working with the NAIC, Kansas City, Mo., to come up with a preferred underwriting table that can be used for setting statutory reserves and wants to have this table in place as soon as possible, Kligerman writes.
Regarding life settlements, Mills told UBS that he expects the New York Legislature to give the department jurisdiction over life settlements. If that happens the superintendent intends to take a look at what he considers the “richness” of life settlement commissions.
As for his ultimate mission, Mills said he views consumer protection as his top priority. “He also appears to favor disclosure as a means of protecting consumers, rather than regulation of product terms or commissions,” Kligerman writes. “Mr. Mills recognizes the need for companies to move products to market quickly and sees this as ultimately benefiting consumers.”