The key players in efforts to revamp life insurance and annuity reserving practices will be traveling to Minneapolis next week to share ideas.[@@]
Regulators, companies chief executives, actuaries and association representatives will be talking about the details of shifting to the new, flexible, “principles-based” approach to setting reserves, and away from the simple, rigid reserving formulas of the past.
The National Association of Insurance Commissioners, Kansas City, Mo., scheduled the interim reserving meeting for Aug. 22 to Aug. 23 as a prelude to a regular NAIC fall meeting scheduled to take place from Sept. 10 to Sept. 13 in New Orleans.
Participants at the interim meeting are likely to talk about an interim version of Actuarial Guideline 38, whichh would create a temporary reserving approach for universal life products with secondary guarantees, and the C3 Phase II project, whichh would set reserve requirements for variable annuities that come with benefit guarantees.
Regulators at the meeting will want to balance the need for strong regulations, speed and uniformity of implementation, according to Jim Poolman, North Dakota insurance commissioner and chair of the NAIC’s Life & Annuities “A” Committee.
Life insurance executives scheduled to speak includee Bob Davis of USAA, San Antonio; Dennis Glass, president of Jefferson-Pilot Corp., Greensboro, N.C.; and John Johns, chairman of Protective Life Corp., Birmingham, Ala.
The American Council of Life Insurers, Washington, also is expected to testify at the meeting.
Representatives for the American Academy of Actuaries, Washington, will describe the evolution of the principles-based approach to reserving and go on to deal with topics such as coordination of state regulatory efforts and systems for evaluating the actuaries who would be responsible for using the flexible new reserving rules, according to Dave Sandberg, an academy representative.
Scott Harrison, executive director of the Affordable Life Insurance Alliance, Washington, a group that favors a principles-based approach, says ALIA will try to educate interim meeting participants of the drawbacks of encouraging insurers to maintain excessively high reserves.
Lowering reserves to reasonable levels will cut premiums and make products more flexible, Harrison says.
“We would like to see the NAIC create a life reserve modernization action plan” with principle-based solutions as its foundation, Harrison says.