A National Association of Insurance Commissioners panel is ready for public feedback on 2 long-running efforts to update life and annuity actuarial standards.[@@]
Members of the panel, the Life and Health Actuarial Task Force, voted 8-4 at a meeting here to expose a draft of an actuarial guideline that deals with reserves for variable annuities with living benefits for public comment.
That draft, which incorporates the work of the American Academy of Actuaries, Washington, and the American Council of Life Insurers, Washington, would emphasize use of “stochastic models,” or models that show how benefits guarantees would work under a wide variety of circumstances. The draft would shift the industry away from use of static formulas for setting minimum reserve levels.
When members of the LHATF approved exposure of the VA guarantee reserve for public comment, they left out a proposal by New York regulators to use a “standard scenario” to set a floor for VA guarantee reserves.
The ACLI and some insurers have objected to the possibility that adopting New York’s standard scenario approach might make the resulting model too conservative and too hard to use.
An executive at Life Investors Insurance Company of America, Cedar Rapids, Iowa, has written a comment letter suggesting that adopting the New York standard scenario approach would require the calculation of a capital markets option cost for embedded guarantees.