A panel at the National Association of Insurance Commissioners has voted 10-3 to approve a draft of changes to Actuarial Guideline 38.[@@]
All members of the panel, the NAIC’s Life & Health “A” Committee, voted on the draft.
The A.G. 38 model draft revisions could change the rules life insurers must follow when reserving for universal life products with secondary guarantees. The effort to develop the draft is part of a broader effort to create a reserving system based on what supporters say are established actuarial principles.
The NAIC’s Life & Health Actuarial Task Force already has approved the draft, but the NAIC, Kansas City, Mo., deferred action on the draft during its recent summer meeting in Boston.
Regulators are treating the draft as a short-term solution that can provide a temporary update to reserving rules while actuaries and others work together to develop a long-term, principles-based solution.
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 proposal that focused on asset adequacy analysis.
In April, the American Council of Life Insurers, Washington, offered a compromise proposal that used the work of the Life & Health Actuarial Task Force as the basis for a model that could hold sway while regulators and actuaries developed a long-term solution. That compromise, developed by leading life insurance company chief executives, was endorsed late last month by the ACLI board.
The drafts of the NAIC’s proposed AG 38 changes and the ACLI compromise both call for an effective date of July 1. The early effective date caused concern among some regulators on the “A” Committee.
Alabama Insurance Commissioner Walter Bell offered an amendment that would have delayed the effective date until Jan. 1, 2006, but that amendment was defeated in a 10-3 vote.
Following the vote to advance AG 38 to the NAIC’s executive and possibly plenary committee, Jim Poolman, North Dakota insurance commissioner and “A” Committee chair, called on regulators to adopt AG 38 uniformly if AG 38 is passed by the NAIC.
“Financial solvency and product regulation are the hallmarks of state solvency,” Poolman said. “If we are not working together uniformly, it will be a death nail to state regulation.”