The National Association of Insurance Commissioners is about to offer some guidance for insurers that must comply with the new C3, Phase II risk-based capital requirements.[@@]
The new guidelines, which take effect at the end of the year for 2005 RBC calculations, will change the way insurers calculate RBC levels for variable annuities that offer secondary guarantees.
To comply with the new RBC requirements, affected insurers must use “stochastic models” that show how products will perform under a wide range of conditions.
In the past, insurers relied mainly on static formulas to come up with product RBC levels.