Members of the National Association of Insurance Commissioners today approved measures that will affect standards for variable annuities with performance guarantees, universal life policies with guarantees, and life insurance policies with small face amounts.[@@]
The NAIC, Kansas City, Mo., dealt with the measures during an executive committee meeting and a “plenary meeting,” or meeting of all member commissioners, held on a conference call.
The NAIC had hoped to address the issues during its fall meeting, but the meeting was scheduled to take place in New Orleans, and Hurricane Katrina forced the cancellation of the meeting.
The VA measure approved, a product of the C-3 Phase II project, will establish a modeling approach for risk-based capital requirements for VA product guarantees.
The new RBC modeling approach will combine use of a traditional “standard scenario” with a more flexible, “principles-based” approach to analyzing exposure to risk.
Lou Felice, a New York regulator and chair of the NAIC’s Capital Adequacy Task Force, said the inclusion of a standard scenario will continue to create a minimum RBC requirement.
The standard scenario requirement will help maintain enough conservatism to satisfy regulators while regulators learn more about the new approach to analyzing risk, Felice said.