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NAIC Group Mulls New Mortality Data

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Life insurers and life actuaries are taking different approaches to developing preferred mortality tables that will be used to implement principles-based reserving.

The differences are raising concerns ranging from timing to perceived consistency to professionalism, according to a discussion among regulators, industry and actuaries held by the Life & Health Task Force of the National Association of Insurance Commissioners, Kansas City, Mo.

Paul Graham, a life actuary with the American Council of Life Insurers, Washington, asked regulators to amend a charge so that work could be done either by the American Academy of Actuaries, Washington, or the Society of Actuaries, Schaumburg, Ill. ACLI wants the change to provide more flexibility and, potentially, a quicker delivery of the revised tables, Graham said.

LHATF approved that part of the request but declined to act on a second component of the request, which was to look at the way tables are being developed.

The actuarial profession is working on a new mortality study that would take new data and create preferred and nonpreferred tables.

Graham said an interim preferred mortality table should use the 2001 CSO Table as a foundation and then split it to develop a preferred mortality table.

The reason is that the industry could lose credibility with the U.S. Treasury Department or Congress if it told them that the 2001 CSO Table was appropriate for tax purposes and then presented them with a very different table later on, he argued during the discussion.

A second reason was that companies are still integrating their products to reflect the 2001 CSO Table, he said. To have to reintegrate products to reflect a new table would be costly and time consuming for those companies.

Actuaries, however, expressed reservations over this tack.

“It is possible that what the Academy comes up with could be a split table,” said Donna Claire, a life actuary and principal with Claire Thinking, Fort Salonga, N.Y.

A split table would use the current 2001 CSO Table and carve out preferred and nonpreferred categories.

Larry Gorski, a life actuary in Claire Thinking’s New Berlin, Ill., office, said he would feel “uncomfortable” as a professional using a table for valuation purposes without looking at the most current information available. The newer data is from the years 2002-2004, he said, while data for the 2001 CSO Table was culled in the early to mid-1990s.

Both Dave Sandberg, representing the American Academy of Actuaries, and Robert Beuerlein, president of the Society of Actuaries, said that their portions of the project were on a fast track for completion.

The work of the actuarial groups will be delivered in March 2007, according to Claire.


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