The insurance industry may need a central body to help it operate under a new, more flexible, “principles-based” reserving system.
The idea of having a central body coordinate use of a principles-based reserving approach came up here at the fall meeting of the National Association of Insurance Commissioners, Kansas City, Mo., at a meeting of the NAIC’s principles-based reserving working group.
The American Academy of Actuaries, Washington, has suggested that a centralized body provide guidance and interpretations that would be compiled in a valuation manual.
But Jim Poolman, chair of the principles-based reserving working group, argued that lawmakers may resist the idea of ceding authority to a central authority such as the NAIC.
Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas, said any centralized body that tries to maintain consistency in reserving methods must offer an open decision-making process and make itself accountable to the public.
Paul Graham, a life actuary representing the American Council of Life Insurers, Washington, said any valuation manual that a centralized body creates should take effect in each state on the same date.