Work on a draft regulation for a preferred mortality table is creating disagreement over whether the best approach is to continue with efforts to develop an interim table that actuaries currently are working on or to split the existing mortality table into preferred and non-preferred tables.
The proposed model regulation permitting the recognition of preferred mortality tables for use in determining minimum reserve liabilities is under consideration by the Life & Health Actuarial Task Force of the National Association of Insurance Commissioners, Kansas City, Mo.
Currently, the American Academy of Actuaries, Washington, and the Society of Actuaries, Schaumburg, Ill., are working on an interim preferred mortality table. Ultimately, a new mortality table is planned.
However, the American Council of Life Insurers, Washington, is urging that a split preferred/non-preferred table developed from an existing table be used rather than going with the creation of an interim table. Instead, ACLI has argued, efforts should be focused on developing a new table that would reflect principles-based reserving.
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Toward that end, during a LHATF session on July 10, ACLI recommended that the AAA be asked to develop a practice note to cover this topic and that the Actuarial Standards Board be asked to expand the scope of Actuarial Standard of Practice No. 40.
The practice note and ASOP would be referenced in the draft regulation and would pave the way for the use of existing mortality data, according to discussions.
LHATF is establishing a subgroup to try to turn around the draft actuarial guideline so that it could be exposed in early August and be ready if the proposed regulation is moved up to LHATF’s parent “A” committee during the NAIC’s fall meeting in September.
Several regulators and a consumer advocate are raising questions about the draft regulation and also about referencing actuarial guidelines in a regulation. The concerns include:
–relinquishing regulatory authority;
–adopting references to actuarial work in a regulation when it is unclear how it would be used and how it would work;
–whether a fast-track approach would offer the proper review to those who have submitted comments already; and,