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.
The NAIC, Kansas City, Mo., already has received 21 questions about the new guidelines, and it is preparing to post the questions and answers on the NAIC Web site, according to Lou Felice, a New York regulator who is chairman of the NAIC’s capital adequacy task force.
Felice spoke here at a session on C3, Phase II implementation.
In addition to posting the C3, Phase II questions and answers on its Web site, the NAIC will be posting results from a simple, 9-question survey. The NAIC is asking insurers to turn in survey responses by Dec. 15, Felice says.