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July 30, 2006 at 04:00 PM
Principle-based reserving continues to draw the attention of regulators as they gear up for another round of discussions early next month.
The issue will turn up during discussions of two regulatory groups of the National Association of Insurance Commissioners, Kansas City, Mo. It also recently was discussed by actuaries during a Webcast sponsored by the American Academy of Actuaries, Washington.
A joint subgroup of the capital adequacy task force/life and health actuarial task force will focus on governance. The issue is a critical one because some regulators do not feel a principle-based system will offer sufficient protection to consumers without it. The concern is that a complete reliance on company determinations may leave policyholders vulnerable to inaccurate or aggressive assumptions.
A second session will be held to consider an interim solution being proposed by the American Council of Life Insurers, Washington.
The ACLI wants work on a new preferred mortality table to be postponed and existing mortality tables to be split into preferred and non-preferred tables. The reason is that it wants the principle-based approach to proceed apace and not be delayed by potential lack of consensus over new tables.
Work is currently under way to draft a guideline that would be used to provide actuarial guidance over split tables. The decision to create such a guideline was made July 10.
The effort to complete the project and get it firmly in place is due in part to an April 1, 2007, sunset provision on a temporary fix, Actuarial Guideline 38.
