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Life Health > Life Insurance

NAIC Postpones Mortality Table Split

By Jim Connolly

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Insurance regulators want to hear from actuaries before deciding whether to carve preferred and non-preferred mortality categories from an existing mortality table.

Members of the Life & Health Actuarial Task Force at the National Association of Insurance Commissioners, Kansas City, Mo., have postponed voting on the proposed mortality table split until teams at the Society of Actuaries, Schaumburg, Ill. and the American Academy of Actuaries, Washington, weigh in.

The American Council of Life Insurers, Washington, says regulators should split the 2001 Commissioners Standard Ordinary Table as a temporary measure, to provide new a preferred mortality table while the life insurance industry is moving toward a more flexible, principles-based approach to reserving.

Insurers want the PBA project to move quickly through the NAIC so that the PBA approach will be in place by April 1, 2007.

Actuarial Guideline 38, which addresses reserving for universal life policies with secondary guarantees, sunsets at that time.

The ACLI has developed a draft of an actuarial guideline that would provide rules and guidelines to help actuaries choose the proper set of mortality rates under the Model Regulation Permitting the Recognition of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities.

A decision to develop an actuarial guideline was made in mid-July, when some regulators said they would be uncomfortable adopting a model regulation that referred to an actuarial guideline that had not yet been developed.

William Carmello, a New York regulator and life actuary, said during a discussion of the mortality table split proposal that he would have liked to have seen more concrete criteria in the draft guideline, such as details on how blood tests would be used to categorize super preferreds.

Other participants in the discussion emphasized that any temporary mortality table measure should leave insurers’ federal taxes unchanged.

If a change in reserving rules caused reserves to fall, insurers’ might have to report more income and pay higher taxes, but a change that caused reserves to rise might not lower insurers’ taxes, some participants warned.

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