Sides Split On Direction Of Preferred Mortality Table

Several regulators and one consumer advocate are raising questions about the draft regulation and also about the idea of referring to actuarial guidelines in a regulation.

New York regulator and life actuary Bill Carmello says he is “uncomfortable ceding what is our responsibility [to actuaries].”

“They can’t make the rules,” Carmello says. “If there are rules in a regulation, we need to make them.” The answer, he adds, is not to refer to an actuarial standard of practice, but to develop a guideline simultaneously with the draft regulation.

“I would not be comfortable at the thought of a guideline that would still have to be developed,” Carmello says.

Sheldon Summers, a California regulator, has written a memorandum expressing reservations about the ACLI proposal. He questions the use of lapse assumptions in the calculation of universal life reserves and the use of the 2001 CSO Table in what appears to be a principles-based way.

“Whereas, the choice of using a smoker and a non-smoker table is based on objective criteria, and that is whether someone smokes or not, the choice of using a preferred version of the split smoker or nonsmoker tables is based on the actuary’s judgment,” Summers writes.

“The ACLI proposal consists of allowing mortality assumptions to be principles-based without being subject to the various requirements that are being proposed for a principles-based approach,” Summers concludes.

Birny Birnbaum, an NAIC-funded consumer advocate and executive director of the Center for Economic Justice, Austin, Texas, is objecting to the idea of adopting a regulation without understanding the implications of internal references to a guideline.

The proposed regulation is “a bald attempt by industry to eliminate reasonable regulatory oversight” Birnbaum writes in a comment letter.

“It appears to us that LHATF is putting forth the American Council of Life Insurers … proposal with little regulatory input, guidance or comment,” Birnbaum writes.