A model regulation that impacts reserving for universal life products with secondary guarantees and is part of a broader effort to create a reserving system based on established principles moved closer to full endorsement by state insurance regulators.
During a session of the Life & Health “A” Committee, a committee of the National Association of Insurance Commissioners, Kansas City, Mo., a draft of an amended Actuarial Guideline 38 was adopted in a 10-3 vote. All members of “A” Committee were present and voted.
The draft that was adopted had been deferred during the summer NAIC meeting after being adopted and passed up by the Life & Health Actuarial Task Force. The draft is considered a short-term solution while a long-term principle-based approach is developed.
Efforts have been under way since February to reach common ground on the contentious issue. In February, the Affordable Life Insurance Alliance, Washington, offered a solution focusing on asset adequacy analysis and in April, the American Council of Life Insurers, Washington, offered a compromise proposal that embraced the work of LHATF in the short term while a long-term resolution is developed. That compromise, developed by leading life insurance CEOs, was endorsed late last month by the ACLI board.
Part of the draft of AG 38 as well as the ACLI compromise both call for an effective date of July 1, 2005, a cause of concern among some regulators on “A” Committee.